CALGARY, Sept. 17, 2012 /CNW/ - ArPetrol Ltd. ("ArPetrol" or the "Company") (TSXV:RPT) announces an operational update on its Faro Virgenes extended reach drilling program.
The first Faro Virgenes extended reach well was drilled to a Measured Depth (MD) of 3467m at an inclination of 76 degrees. The top of the Springhill formation reservoir section was encountered on prognosis. While preparing the hole to run 9 5/8" casing, the drill string became stuck at 2399m MD. ArPetrol has made multiple attempts to free the drill string, without success. As a consequence, ArPetrol has severed the drill string and has set cement plugs to temporarily suspend operations. The incident, operations associated with attempts to remedy the incident, suspension activities, and the cost of tools lost in hole have added approximately $4 million to well costs. Further costs will be incurred for personnel and equipment demobilization (related to, among other things, service providers, rental tools, the drilling camp and the drilling rig) and unused equipment restocking. Following this the working capital of the Company would be estimated to be approximately $2 million, however, this will vary depending on the final demobilization costs as well as any currency exchange fluctuations.
Based on its technical work and consultation with the drilling experts, the Company determined that approximately an additional $10 million would have been required to reactivate the drilling, completion, tie-in and production testing of the well at this time. The Company has attempted to identify sources of additional funding to continue with this well, but based on these attempts has determined that the required funding is not currently available. Management and the board of directors wish to continue to advance this project and remain committed to create value from the Company's assets. They will be reviewing strategic alternatives in order to identify and consider all options available in order to determine the optimal course of action for the Company and its shareholders, including a potential financing, a farm-out or disposition of assets, a joint venture, and a sale or merger of the Company.
ArPetrol will discuss these recent developments in a conference call today, September 17th, at 12pm MDT (2pm EDT) and would like to invite shareholders and interested parties to participate. Tim Thomas, the President & Chief Executive Officer of ArPetrol, will make a brief presentation and then take questions. Interested parties may participate by dialing 1-855-353-9183 (Canada & US) or (403) 532-5601 (Calgary & International), and the participant passcode is 33045#.
About ArPetrol Ltd.
ArPetrol is a Calgary-based publicly traded company engaged in oil and natural gas exploration, development and production and third-party natural gas processing in Argentina, where it owns and operates a gas processing facility with capacity of 85 million cubic feet (mmcf) per day. The Company's common shares are listed on the TSXV under the symbol "RPT".
This news release contains certain forward‐looking statements relating, but not limited, to cost estimates related to personnel and demobilization, the estimated working capital following demobilization, cost estimates to reactivate the well, the impact of currency fluctuations and controls on all cost estimates, drilling plans and ability to rectify the drilling problems that have been encountered, and the availability of future financing or another strategic alternative. The Company cautions readers and prospective investors in the Company's securities not to place undue reliance on forward‐looking information as, by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company. A number of factors could cause actual results to differ materially from those anticipated by the Company, including but not limited to risks associated with the oil and natural gas industry (e.g., operational risks in demobilization, or reactivating, drilling and completing the well; the ability to retain staff and equipment; and health, safety and environmental risks), weather delays and natural disasters, union activities, change in government policies, currency fluctuations and controls, a change in the manner and rates at which the Company is exchanging its currency, the risk of interruptions to production and processing revenue, changes in commodity prices, increased costs, unavailability of funding or a strategic alternative or transaction, and other risks associated with international activity. ArPetrol operates outside of Canada and as such, is subject to a number of political risks over which it has no control. The forward‐looking information included herein is expressly qualified in its entirety by this cautionary statement. The forward‐looking information included herein is made as of the date hereof and the Company assumes no obligation to update or revise any forward‐looking information to reflect new events or circumstances, except as required by law.
Additional information relating to the Company is also available on SEDAR at www.sedar.com.
Neither the TSXV nor its Regulation Services Provider (as defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: ArPetrol Ltd.
For further information:
Tim Thomas, President and Chief Executive Officer
Ian Habke, Chief Financial Officer
Main Phone: 403-263-6738