CALGARY, Dec. 1 /CNW/ - Petrolifera Petroleum Limited (PDP - TSX) announces today it has concluded its evaluation of remediation alternatives for its La Pinta 1X well on the company's 100 percent-owned Sierra Nevada License in the Lower Magdalena Basin, Colombia.
Subject to finalization of the related contract and final determination of the date for shipping of a snubbing unit from a port in the U. S. A. to Colombia, Petrolifera's Board of Directors has authorized management to proceed with its recommendation to contract a snubbing unit, transport it to Colombia and then initiate a program to reenter the La Pinta 1X well bore, clean out the blockage in the tubing string situated in the well bore and then to attempt a completion of the well. If, as anticipated, the La Pinta 1X remediation program is successful, it is further anticipated Petrolifera will then proceed with a long-term production test, before the preparation and submission of a full blown commercial development program to ANH, the related state agency of Colombia.
It is anticipated the requisite equipment will be mobilized in January 2010. Assuming normal handling by customs officials and then transportation of the snubbing unit from the port of entry to the wellsite, field operations under the direction of specialists in these matters are anticipated to commence approximately four weeks after mobilization and to be completed after approximately two months or less from startup of the planned program.
It is the view of Petrolifera's management and Board of Directors that this decision provides Petrolifera with the best opportunity of managing perceived risk, associated costs and achieving the desired outcome from the La Pinta 1X well, which is the production of light gravity crude oil. Including testing, the project is anticipated to cost approximately US$5 million to US$6 million. If successful, this approach is anticipated to be a satisfactory and the preferred solution to determine the commercial viability of the La Pinta 1X light gravity crude oil and natural gas discovery.
In addition to the remediation program at La Pinta 1X, during January 2010 Petrolifera will be conducting a 3D seismic program over the La Pinta structure, with a view to identifying locations for the development of the La Pinta light crude oil accumulation, if warranted by production testing of the Cienaga de Oro Formation at La Pinta 1X. Also, it will assist Petrolifera in confirming the final locations of the company's proposed La Pinta 2X and La Pinta 3X wells, which have been designed to test the shallower Porquero and Tubara Formations. Based on logs and hydrocarbon shows encountered while drilling but before testing, both these Formations were indicated to be hydrocarbon-bearing in the La Pinta 1X well bore. It should be noted crude oil and natural gas was recovered from the Porquero Formation during testing of the Guamito 1X well, which was drilled by another operator in 1975 and offsets the La Pinta 1X well.
Separately, the company anticipates that after completing a drilling program for another operator, the drilling rig which is under a long-term contract to Petrolifera, will shortly be returned to it for its use. Accordingly, Petrolifera anticipates commencement of the drilling of the second commitment well on the Sierra Nevada License at Brillante in late January 2010. This well, Brillante SE 1X, is designed to evaluate a large seismically-defined structure and is considered prospective for natural gas and natural gas liquids. The proposed well and related prospect are on the Arjona structural trend and are located southeast of the El Dificil natural gas field, which has been depleted through production. The Brillante structure is also immediately northwest of the Arjona natural gas field, which is owned by another operator. The Brillante SE 1X well will be drilled under normal down hole pressure conditions, unlike the overpressured conditions which were encountered at the La Pinta 1X well.
Petrolifera also anticipates commencement of the drilling of a test well on its San Angel prospect on its Magdalena License, which surrounds and offsets the Sierra Nevada License, during the fourth quarter of 2010.
Petrolifera is finalizing the contract related to a farmout of its Turpial License in the Middle Magdalena Basin. Once the contract is formally completed, details of the farmout will be provided.
The company continues to dialogue with a number of companies about joint venture activity on its Sierra Nevada and Magdalena Licenses, which are 100 percent-owned by Petrolifera and together cover an area exceeding 800,000 acres.
Petrolifera Petroleum Limited is a Calgary-based crude oil and natural gas exploration and production company engaged in exploration and production activities in Argentina, Colombia and Peru. Its common shares and warrants are listed for trading on the Toronto Stock Exchange under the symbols PDP and PDP.WT, respectively.
Forward Looking Information
This press release contains forward looking information including, but not limited to, the company's plans to remediate and test the La Pinta No. 1 well in Colombia and the submission of a commercial development program to ANH in respect thereof, the timing and costs associated therewith, future exploration and development plans in Colombia, the timing associated therewith and the anticipated benefits thereof, the return of a drilling rig to the company and planned farmout/joint venture arrangements. Forward looking information is not based on historical facts but rather on Management's expectations regarding the company's future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity, environmental matters, business prospects and opportunities and expectations with respect to general economic conditions. Such forward looking information reflects Management's current beliefs and assumptions and is based on information currently available to Management. Forward looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward looking information, including but not limited to, risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production, unavailability of or delays in receipt of required equipment, delays or changes to plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environment risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and third parties located in foreign jurisdictions and the risk associated with international activity. There can be no assurance that planned remediation efforts and subsequent testing of the La Pinta No. 1 well drilled on the Sierra Nevada I License will yield commercial results. Hydrocarbon shows and results of logs do not confirm the presence of commercial hydrocarbons. The company's ability to complete its capital program is dependent upon completion of planned farmout arrangements and recovery of sunk costs, restoration of production in Argentina and stabilized or improved commodity prices. In addition, the current financial crisis has resulted in severe economic uncertainty and resulting illiquidity and volatility in credit and capital markets which increases the risk that actual results will vary from forward looking expectations in this press release and these variations may be material. Additional risks and uncertainties associated with Petrolifera's future plans are described in Petrolifera's Annual Information Form for the year ended December 31, 2008. Although the forward looking information contained herein is based upon assumptions which Management believes to be reasonable, the company cannot assure investors that actual results will be consistent with this forward looking information. This forward looking information is made as of the date hereof and the company assumes no obligation to update or revise this information to reflect new events or circumstances, except as required by law. Because of the risks, uncertainties and assumptions inherent in forward looking information, prospective investors in the company's securities should not place undue reliance on this forward looking information.
SOURCE PETROLIFERA PETROLEUM LIMITED
For further information: For further information: Petrolifera Petroleum Limited, R. A. Gusella, Executive Chairman, (403) 538-6201; Or Gary D. Wine, President and Chief Operating Officer, (403) 539-8450; Or Kristen J. Bibby, Vice President Finance and Chief Financial Officer, (403) 539-8450; Fax: (403) 538-6225, firstname.lastname@example.org, www.petrolifera.ca