Petroamerica Announces Two Oil Discoveries, 2014 Guidance and Provides an Operations Update for Activities in Colombia

CALGARY, Jan. 9, 2014 /CNW/ - Petroamerica Oil Corp. (TSX-V:PTA) ("Petroamerica" or the "Company"), a Canadian oil and gas company operating in Colombia is pleased to announce two new oil discoveries, present its expected 2014 production and capital expenditure guidance, and provide an operations update for ongoing activities in Colombia (note: all financial amounts shown are in United States Dollars unless otherwise stated).


  • La Casona-2 discovered light 47 degree API oil in the Mirador Formation, testing at rates of 545 barrels of oil per day ("bopd") and 3.6 million standard cubic feet per day ("MMscfd") of gas on a restricted choke;
  • Rumi-1 discovered 15.5 degree API oil in the Une Formation, testing approximately 1,000 bopd under natural flow conditions;
  • La Guira-2 well has reached its target depth of 12,600 feet and is currently being logged.
  • December production averaged 6,414 barrels of oil equivalent per day ("boepd") (6,328 bopd and 14.9 million standard cubic feet ("MMscf") of sales gas) and fourth quarter production averaged 6,341 boepd (6,313 bopd and 14.9 MMscf of sales gas);
  • Production for the year averaged 5,440 boepd (5,433 bopd and 14.9 MMscf of sales gas) beating 2013 guidance by 21%, and a 390% increase from 2012 average production of 1,392 bopd;
  • Firm capital expenditures for 2014 are estimated at $70 million. The capital expenditure program is expected to be fully covered by existing cash and operating cash flow coming from production.

La Casona-2 Mirador Discovery, El Eden Block (40% Working Interest)

The La Casona-2 appraisal well was drilled 600 meters away from La Casona-1 and a service rig was used to test the Mirador Formation, which was untested in the La Casona-1 well. The well was tested over an extended 7-day period from a 12-foot perforated interval on a restricted 20/64-inch choke and averaged an oil rate of 545 bopd and 3.6 MMscfd of gas, with peak oil rates reaching more than 740 bopd. The well was flowing naturally and a total of 3,903 barrels of 47 degree API oil was recovered during the test. The water-cut at the end of the test was 1.9%.

Rumi-1 Discovery, El Eden Block (40% Working Interest)

The Rumi-1 exploration well was spud on November 16, 2013 and drilled to a total depth of 14,620 feet. Wire-line logs indicate the presence of a gross hydrocarbon column of approximately 60 feet in the Une Formation of which 27 feet is interpreted to be net oil pay distributed over four separate sands. Testing of the Une was carried out using a service rig, and the top three sands were initially swab tested giving a rate of approximately 350 bopd for the last 12 hours of swabbing and a final water-cut of 1%. The fourth sand was then perforated and all four sands were tested together at rates of approximately 1,000 bopd of 15.5 degree API oil through a 24/64-inch choke for the first 20 hours of testing. The average rate for the entire commingled test of more than 30 hours on the 24/64-inch choke was 762 bopd, with peak rates reaching 1,274 bopd. The water-cut at the end of the commingled test was 32%. It is planned to complete the well with an electro-submersible pump and place on long-term test.

La Guira-2, Los Ocarros Block (Sole Risk Drilling Operation, 100% Working Interest)

The La Guira-2 appraisal well was spud on December 26, 2013 and has reached its target depth of 12,600 feet. The well is currently being logged following which a decision will be taken whether to case the well for testing. La Guira-2 is drilled approximately 350 meters to the south of La Guira-1, in an attempt to get further up-dip from the Mirador oil leg tested in that well.

2013 Production Update

Total company working interest production for the fourth quarter averaged 6,341 boepd (6,313 bopd and 14.9 MMscf of sales gas). Production for the last month of the year averaged 6,414 boepd (6,328 bopd and 14.9 MMscf in sales gas). Production for the entire year averaged 5,440 boepd (5,433 bopd and 14.9 MMscf in sales gas) representing a 390% increase from 2012 average production of 1,392 bopd, and beating guidance issued at the beginning of the year by 940 bopd or 21%.

Production Guidance for 2014

Petroamerica expects its 2014 base case production to be between 5,000 and 5,500 boepd average for the year. This base case includes production coming from the Las Maracas Field, the Balay Field, the La Casona-1 well and the Curiara-1 long-term test. It does not include production from the Mirador discovery at La Casona-2, the Une discovery at Rumi-1, or any production from successful exploration wells to be drilled in 2014. The production guidance is expected to be revisited later in the year as the Company gathers more information on the new discoveries and evaluates the results from its ongoing exploration and appraisal activities.

Capital Expenditures and Work Program for 2014

The Petroamerica 2014 firm capital expenditure program is $70 million, of which $49 million will be for exploration activities, $5 million for appraisal drilling and long-term testing, and $16 million for development activities. In addition to the firm capital budget, the Company also has a contingent budget of $38 million for exploration, appraisal and development activities. The 2014 capital expenditure program is expected to be funded from existing cash, and operating cash flows coming from production. The Company will also continue to attempt to reduce its capital exposure in the high working interest wells.

  Projected Net CAPEX (millions)
Activity Firm Contingent
Exploration $49 $22
Appraisal     5   13
Development   16     3
Total $70 $38

Petroamerica has implemented a commodity risk management policy, which it will review on at least a quarterly basis, to protect the Company's forward cash flows. For the first 3 months of 2014, Petroamerica purchased ICE Brent puts at $95 pricing for 5,000 bopd for a total cost of $191,250. This program ensures that the Company is protected from near term price declines, but does not limit the Company's upside from rising oil prices.

2014 Exploration & Appraisal Drilling Schedule

Our 2014 exploration & appraisal drilling program provides a number of catalysts giving exposure to material exploration prospects throughout the year. A number of contingent wells may be incorporated into the final schedule depending on long-term test results and available capital. The final drilling schedule will be subject to partner and regulatory approvals, exploration drilling success and the availability of capital.

Firm Wells Working Interest Q1 Q2 Q3 Q4
La Guira-2 100% X      
Crypto-1 100%   X    
Malavar-1 50%     X  
Los Ocarros-X-1 50%     X  

About Petroamerica:

Petroamerica Oil Corp. is a Canadian oil and gas exploration and production company with activities in Colombia. Petroamerica produces more than 6,300 bopd and has interests in five blocks, all located in Colombia's Llanos Basin. Petroamerica's shares are listed on the TSX Venture Exchange under the symbol "PTA".

Forward-Looking Statement

This news release includes forward-looking statements related to the expected occurrences in relation to the properties and drilling activities identified, the anticipated timing of well results, the capital budget, the expected use of finds in the current fiscal year and possible new exploratory drilling in the current year. A multitude of factors can cause actual events to differ significantly from any anticipated development and although Petroamerica believes that the expectations represented by such forward-looking statements are reasonable; there can be no assurance that such expectations will be realized.  These forward looking statements are based upon assumptions that Petroamerica has made concerning the oil and gas industry in Colombia, the reliability of available data regarding the properties, and the continuing market for oil and gas.  Risk factors may include the uncertainty of conducting operations under a foreign regime, the availability of labour and equipment, the fluctuating price of oil and gas, and Petroamerica's dependence upon other participants in the property areas.  Neither Petroamerica nor any of its subsidiaries nor any of its officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors, nor do any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document or the actual occurrence of the forecasted developments.

Although the Company believes that the expectations represented by the forward-looking statements contained herein are reasonable, undue reliance should not be placed on the forward-looking statements because there can be no assurance that such expectations will be realized. The forward-looking statements contained in this document are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Data obtained from the initial testing results at the wells identified in this press release, including barrels of oil and cubic feet of gas produced, levels of water cut and net feet of oil pay, should be considered to be preliminary until a further and detailed analysis or interpretation has been done on such data. The well test results obtained and disclosed in this press release are not necessarily indicative of long-term performance or of ultimate recovery. The reader is cautioned not to unduly rely on such results as such results may not be indicative of future performance of the well or of expected production results for the Company in the future.

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.

Use of 'boe'

Throughout this press release, the calculation of barrels of oil equivalent ("boe") is at a conversion rate of 5,600 cubic feet ("cf") of natural gas for one barrel of oil and is based on an energy equivalence conversion method. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 5,600 cf: 1 barrel is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalence at the wellhead

SOURCE: Petroamerica Oil Corp.

For further information:

Nelson Navarrete
President and CEO

Colin Wagner

Ralph Gillcrist
COO, Executive Vice President

Tel Bogota, Colombia: +57-1-744-0644
Tel Calgary, Canada: +1-403-237-8300
Web Page:

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