PetroMagdalena Continues Exploration Success with Another Discovery on the Cubiro Block

TORONTO, Feb. 27, 2012 /CNW/ - PetroMagdalena Energy Corp. (TSXV: PMD), provided an update today on its ongoing exploration program.

Luciano Biondi, Chief Executive Officer of the Company stated: "The Llanos exploration program is continuing to build our production and reserves, the latest discovery occurring at Cernicalo in the Cubiro Block where we now have Upper Guadalupe sands on production and potential in uphole in the C7 sands. With the growing success from our exploration program we can begin to look for growth opportunities that can be funded from our expanding cash flow."

CERNICALO DISCOVERY AT CUBIRO

PetroMagdalena has discovered a new field with the Cernicalo-1 ST, a sidetrack of the Cernícalo 1 exploration well, which was drilled to explore the prospectivity of the Carbonera Formation, located on Polygon B of the Cubiro Block, where the Company holds a 70% working interest. The Cernicalo-1ST well was perforated in two Upper Guadalupe sands and it is currently being tested. In the last five hours, with an electro-submersible pump at 23 Hz, the Guadalupe Formation has produced an average of  530 bopd of 23.9 degrees API oil with 30% BS&W.  This represents 371 bopd as PetroMagdalena's gross working interest share. The activities in the Cernicalo 1 ST also include testing the Carbonera C7.

The Cernicalo-1ST well was spudded on January 18, 2012, drilled to a final depth of 6,845 feet MD and logged on January 28, 2012. The top of the Carbonera C7 sand was found at a depth of 5,880 feet MD. Petrophysical data show 13 feet of net pay in C7, with porosity of 24% and hydrocarbon saturation of 50%; and 12 feet in Upper Guadalupe, with porosity of 28% and oil saturation of 50%. Based on seismic interpretations, the accumulation discovered by Cernicalo-1ST is a 1.5 km long structure, corresponding to the typical exploration play in the Llanos Basin. The structure is on trend with the Barranquero field to the north and Tijereto Sur-1X exploration well to the south.

EXPLORATION UPDATE

Santa Cruz Block, Catatumbo Basin: Santa Cruz -1X Exploration well

The Santa Cruz-1X well, located on the Santa Cruz Block in the Catatumbo Basin in North Eastern Colombia, was drilled to the Middle Los Cuervos Formation, reaching TD of 11,550 feet (MD), and finding a repeated section of the Mirador Formation. Based on the petrophysical logs and mud logging, a 7-inch production liner has been run in the well and plans are in place to test several intervals in the Mirador and Los Cuervos formations. Results from the testing program are expected towards mid-March 2012. PetroMagdalena has a 70% working interest in the Santa Cruz-1X well and is the operator of the Santa Cruz Block.

Cubiro Block, Llanos Basin: Tijereto Sur - 1X Exploration well

The Tijereto Sur-1X exploration well on the Cubiro Block has been drilled to a TD of 6,926 feet (MD) and, based on the petrophysical log data, 7-inch production casing has been run in the well to total depth and work is ongoing to complete and production test the C7 Carbonera Formation. Results from the completion and testing program are expected by early March 2012. PetroMagdalena has a 70% working interest in the Tijereto Sur-1X well and is the operator of the Cubiro Block.

Arrendajo Block, Llanos Basin: Arrendajo Norte - 1X Exploration well

The Arrendajo-1X well on the Arrendajo Block was drilled on February 9, 2012 to a TD of 6,298 feet (MD) and subsequently sidetracked to a TD of 7,343 feet. Petrophysical data do not show any prospective interval and the well will be abandoned.

For location details on these wells, please refer to the Company's investor presentation at www.petromagdalena.com.

PetroMagdalena is a Canadian-based oil and gas exploration and production company, with working interests in 19 properties in five basins in Colombia. Further information can be obtained by visiting our website at www.petromagdalena.com.

All monetary amounts in U.S. dollars unless otherwise stated. This news release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the business, operations and financial performance and condition of PetroMagdalena. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of PetroMagdalena; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of PetroMagdalena and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated. Although PetroMagdalena has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. PetroMagdalena undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

Statements concerning oil and gas reserve estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the oil and gas that will be encountered if the property is developed. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Estimated values of future net revenue disclosed do not represent fair market value.

Neither 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 news release.

Glossary

1P: Proven reserves G&A: General and Administrative Expenses
2P: Proven + Probable reserves MMCF: Million Cubic Feet
3P: Proven + Probable + Possible reserves MD: Measured Depth
ANH: Agencia Nacional de Hidrocarburos MMBBLS: Million Barrels of Oil
API: American Petroleum Institute MMBTU: Millions British Thermal Unit
BOE: Barrels of Oil Equivalent  
BOFD: Barrels of Fluid Per Day NPV: Net Present Value
BOPD: Barrels of Oil Per Day PSI: Pounds per Square Inch. The unit of pressure.
BOEPD: Barrels of Oil Equivalent Per Day TD: Total Depth of the well
BS&W: Basic Sediments and Water TVD: True Vertical Depth of the well
E&PC: Exploration & Production Contract TVDSS: True Vertical Depth Sub Sea 
ESP: Electric Submersible Pump WI: Working Interest
FOB: Freight on Board WTI: West Texas Intermediate Oil Price Index

 

SOURCE PetroMagdalena Energy Corp.

For further information:

Michael Davies
Chief Financial Officer
(416) 360-7915

Belinda Labatte
Investor Relations Representative
(647) 436-2152

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PetroMagdalena Energy Corp.

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