PetroNova announces updated NI 51-101 prospective resource report, additional oil and gas resources

CALGARY, Sept. 13, 2011 /CNW/ - PetroNova Inc. ("PetroNova" or the "Company") (TSX-V: PNA), a company engaged in the exploration and development of oil and natural gas resources in Colombia, today announced that is has received an updated independent engineering evaluation of the prospective resources attributable to the Company's five oil and gas exploration and development blocks in Colombia (the "Resource Report"). The Resource Report is dated September 7, 2011 with an effective date of June 30, 2011 and was prepared by Petrotech Engineering Ltd. ("Petrotech") in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the COGE Handbook.

Compared to the Company's initial resource report effective March 31, 2010, the Resource Report incorporates 13 additional drill-ready prospects that were identified and mapped based on the results of more than 2,000 kilometers of recent 2D seismic campaigns in the PUT-2, CPO-6, CPO-7 and CPO-13 blocks. The 2D seismic campaigns also identified 21 additional leads that will require further data and/or technical evaluation to be developed into drill-ready prospects. The Company holds a 100% working interest on its PUT-2 block, a 90% working interest on its Tinigua block and a 20% working interest on its CPO-6, CPO-7 and CPO-13 blocks (collectively, the "Colombian Blocks").

"We are very encouraged by the increase in the prospective oil resources identified by Petrotech, which represents an increase of 64% in the best estimate of prospective resources in the evaluated blocks, which include the PUT-2, CPO-06, CPO-07 and CPO-13 blocks," said Antonio Vincentelli, President and Chief Executive Officer of PetroNova. "The results of this report reinforce our confidence in the Company's properties already established by the expertise of our team, the quality of our assets and the success of our neighbors."

The following table sets forth the estimated unrisked recoverable prospective resources (figures below correspond to the sum of Light & Medium type crudes and Heavy & Extra Heavy types of crude) attributable to the Colombian Blocks as evaluated by Petrotech:

Evaluated Blocks
Low Estimate

(MMBbls)(1)
Best Estimate

(MMBbls)(1)
High Estimate

(MMBbls)(1)
PUT-2
(WI = 100%)(2)
29.97 75.50 165.77
CPO-6
(WI = 20%)(2)
0.23 4.49 12.57
CPO-7
(WI = 20%)(2)
0.00 21.16 68.71
CPO-13
(WI = 20%)(2)
2.94 13.16 27.64
Sub Total Evaluated Blocks 33.14 114.31 274.69
Other Block
Low Estimate
(MMBbls)(1)
Best Estimate
(MMBbls)(1)
High Estimate
(MMBbls)(1)
Tinigua
(WI = 90%)(2)(3)
49,64 177,1 349,36
Total for all Blocks 82.78 291.40 624.05
Notes:  
   
a)  "MMBbls" means million barrels of oil.
b)  The term "working interest" is equivalent to the Company's "participating interest", which interest has been granted to the Company pursuant to its exploration and production contracts with the Agencia Nacional de Hidrocarburos (the "ANH"), the national Colombian hydrocarbons regulator.  A "participating interest" means the undivided ownership interest of a party (expressed as a percentage of the total ownership interests of all parties in an exploration and production contract) in the rights and obligations derived from such contract, which ownership interest has been recognized by the ANH and the Colombian Ministry of Energy and Mines.
c)  The Company has a 100% working interest (participating interest) in the Tinigua block which is subject to a 10% private working interest granted to a third party.
d)  Numbers may not add up due to rounding.
e)  The above unrisked recoverable prospective resources are before deduction of royalties.

The Company expects to find light and medium crudes (higher than 22.3°API in its PUT-2 Block as well as in the CPO-6 Block and in the NE part of its CPO-7 Block. In the rest of the CPO-7 Block, in Tinigua, and in CPO-13, heavy and extra heavy crudes (between 10 and 22.3 °API) are expected, as indicated in the Resource Report. Petrotech has also assessed the probability of discovery or chance of success for each prospect's prospective zone. This chance of success ranges from the mid 20s to the high 40s. Risking of prospective resources addresses the probability of success for the discovery of petroleum. The principal risk elements taken into account in this assessment include: (1) trap and seal characteristics; (2) reservoir presence and quality; (3) source rock capacity, quality and maturity; and (4) timing, migration and preservation of petroleum in relation to trap and seal formation. Geologic risk assessment is a highly subjective process dependent upon the experience and judgment of the evaluators and is subject to revisions with further data acquisition or interpretation.  Risked Prospective Resources have both an associated chance of discovery and a chance of development.  There is no certainty that any portion of the resources will be discovered.  If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.  Not all exploration projects will result in discoveries. The chance that an exploration project will result in the discovery of petroleum is referred to as the "chance of discovery." The following table sets forth the Risk Adjusted Recoverable Prospective Resources attributable to each Block utilizing the Chance of Discovery determined by Petrotech for each Prospect and its components:

Block Low Estimate
(MMBbls)(1)
Best Estimate
(MMBbls)(1)
High Estimate
(MMBbls)(1)
PUT-2
(WI = 100%)(2)
8.91 22.46 49.15
Tinigua
(WI = 90%)(2)(3)
17.22 64.11 125.69
CPO-6
(WI = 20%)(2)
0.05 1.32 3.73
CPO-7
(WI = 20%)(2)
0.00 6.99 22.15
CPO-13
(WI = 20%)(2)
1.21 5.39 11.32
Total 27.40 100.27 212.04

Notes:

a)      "MMBbls" means million barrels of oil.
b)      The term "working interest" is equivalent to the Company's "participating interest", which interest has been granted to the Company pursuant to its exploration and production contracts with the Agencia Nacional de Hidrocarburos (the "ANH"), the national Colombian hydrocarbons regulator.  A "participating interest" means the undivided ownership interest of a party (expressed as a percentage of the total ownership interests of all parties in an exploration and production contract) in the rights and obligations derived from such contract, which ownership interest has been recognized by the ANH and the Colombian Ministry of Energy and Mines.
c)     The Company has a 100% working interest (participating interest) in the Tinigua block which is subject to a 10% private working interest granted to a third party.
d)      Numbers may not add up due to rounding.
e) The above risked recoverable resources are before deduction of royalties.

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.  Prospective resources have both an associated chance of discovery and a chance of development. Not all exploration projects will result in discoveries. The chance that an exploration project will result in the discovery of petroleum is referred to as the "chance of discovery". Thus, for an undiscovered accumulation the chance of commerciality is the product of two risk components - the chance of discovery and the chance of development.  The estimates of prospective resources contained in this press release have been risked for the chance of discovery but have not been risked for the chance of development and hence are considered partially risked estimates.

Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations and projects and over the life of a project. Consequently, estimates of resources should generally be quoted as a range according to the level of confidence associated with the estimates. The range of uncertainty of estimated recoverable volumes may be represented by either deterministic scenarios or by a probability distribution. Resources should be provided as low, best and high estimates as follows:

  • Low Estimate is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

  • Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

  • High Estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

The Resource Report includes a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of resources, timing and amount of capital expenditures, marketability of production, future prices of crude oil and natural gas, operating costs, well abandonment and salvage values, royalties and other government levies that may be imposed over the producing life of the resources. These assumptions were based on prices in use at the date the Resource Report was prepared, and many of these assumptions are subject to change and are beyond the Company's control.

Estimates with respect to resources that may be developed and produced in the future are often based upon volumetric calculations, probabilistic methods and upon analogy to similar types of resources, rather than upon actual production history.  Estimates based on these methods generally are less reliable than those based on actual production history.  Subsequent evaluation of the same reserves based upon production history will result in variations, which may be material, in the estimated resources.  Resource estimates may require revision based on actual production experience. 

There are numerous uncertainties inherent in estimating resources, including many factors beyond the Company's control, and no assurance can be given that the indicated level of resources or recovery of crude oil will be realized. In general, estimates of recoverable crude oil resources are based upon a number of factors and assumptions made as of the date on which the resource estimates were determined, such as geological and engineering estimates which have inherent uncertainties and the assumed effect of regulation by governmental agencies. All such estimates are, to some degree, uncertain, and classifications of resources are only attempts to define the degree of uncertainty involved.

About PetroNova:

The Company, through its subsidiaries, is engaged in the exploration for, and the acquisition and development of, oil and natural gas resources in South America, specifically in Colombia.  The Company's assets currently include the Company's interests in the PUT-2 and the Tinigua blocks located in the Caguan-Putumayo Basin in Colombia, both of which are operated by the Company, and the non-operated CPO-06, CPO-07 and CPO-13 blocks located in the Llanos Basin in Colombia.  The common shares of the Company trade on the TSX Venture Exchange under the stock symbol "PNA".

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements and Information

This press release contains forward-looking statements pertaining to the Company's prospective resources. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Management believes the expectations reflected in these forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release. With respect to forward-looking statements contained in this press release, assumptions have been made regarding, among other things: initial production rates, production decline rates, ultimate recovery of resources, timing and amount of capital expenditures, marketability of production, future prices of crude oil and natural gas, operating costs, well abandonment and salvage values, royalties and other government levies that may be imposed over the producing life of the resources. These assumptions were based on prices in use at the date the Resource Report was prepared, and many of these assumptions are subject to change and are beyond the Company's control.  Actual results could differ materially from those anticipated in these forward-looking statements as a result of certain risk factors, including, but not limited to: general economic, market and business conditions; risks related to the exploration, development and production of oil and natural gas; risks inherent in estimating resources; risks related to the timing of completion of the Company's projects; and the other factors discussed under the heading "Risk Factors" in the Company's annual information form for the year ended December 31, 2010 and the Company's other continuous disclosure documents filed from time to time with applicable securities regulatory authorities in Canada and which may be accessed on the PetroNova's SEDAR profile at www.sedar.com.

Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements included in this press release are expressly qualified by this cautionary statement and are made as of the date of this press release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.

SOURCE PetroNova Inc.

For further information:

Antonio Vincentelli
President & Chief Executive Officer  
954 317 3990
antonio.vincentelli@petronova.com
        Stelvio Di Cecco
Chief Financial Officer
954 317 3990
stelvio.dicecco@petronova.com

Abby Garfunkel
Investor Relations
403 218 2887
agarfunkel@equicomgroup.com 

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PetroNova Inc.

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