/NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
CALGARY, Jan. 9 /CNW/ - Petro Andina Resources Inc. (Petro Andina or the
Company) is pleased to provide an update on its 2007 drilling program and
Petro Andina's net production for the month of December averaged
8,600 barrels of oil per day (17,250 gross), which exceeded the Company's
previously published target exit rate by 20 percent. The average December
daily production represented an increase of 193 percent from the 2,940 barrels
of oil per day (net) produced in December 2006 and an increase of 30 percent
from the average of 6,627 barrels of oil per day (net) produced in the third
quarter of 2007. The increase in production was the result of the Company's
expanding development program.
Development and Delineation Drilling
The 2007 drilling program was focused on two principal objectives:
development and delineation of the El Corcobo Norte (ECN) field, and
evaluation of new prospects across the balance of the land portfolio.
During 2007 Petro Andina drilled a total of 137 gross development wells
(68.6 net) with a success rate of 98 percent. The Company also drilled
20 gross appraisal wells (9.8 net) with a success rate of 85 percent.
Petro Andina drilled six successful appraisal wells in the area between
the ECN field and the Puesto Pinto (PP) field to the east. These wells have
encountered between three and nine metres of pay in the Lower Centenario sands
and have led Petro Andina to the conclusion that PP is most likely a
continuation of the ECN field. This extension area covers approximately
five square kilometres.
During the fourth quarter of 2007 the Company also drilled four
successful delineation wells to follow-up on the ECN 84 discovery, made during
the second quarter of 2007. At the time, ECN 84 was the most northerly
producing well in the ECN field. These delineation wells drilled at one
kilometre distances to the southwest, east and northeast of ECN 84 encountered
pay thicknesses of between three and seven metres and confirm that the area of
thick pay extends further northward than previously estimated. This has
expanded the current productive width of the trend in the vicinity of ECN 84
to approximately five kilometres.
Including the four wells offsetting ECN 84, throughout 2007 the Company
drilled 12 wells to test the updip limits of the ECN field. All 12 of the
wells were completed as oil wells with pay thicknesses ranging from one to
seven metres which suggests that the boundary of the updip limit of the field
has not yet been established.
During 2007 Petro Andina drilled 16 gross (9.8 net) exploration wells,
with a success rate of 45 percent. During the fourth quarter the Company
drilled and tested two successful exploration wells in the Gobernador Ayala
Este (GAE) area on its Gobernador Ayala III (GA III) Block in the Neuquen
Basin of Argentina. Petro Andina operates the Block with a 70 percent working
The GAE x1 well was drilled two kilometres to the south of the Company's
PP field and eight kilometres to the southeast of the ECN field. The well
encountered six and one half metres of pay in the Lower Centenario sands,
which form the reservoir at both ECN and PP.
The GAE x2 well was drilled two and one half kilometres to the west of
GAE x1. The GAE x2 well encountered four metres of pay in the Lower Centenario
The two wells were each placed on test for 48 hours. The GAE x1 well
tested 90 barrels of oil per day from one sand. The GAE x2 well tested
90 barrels of oil per day from two sands. Based on its experience with Lower
Centenario reservoirs in the offsetting fields, the Company anticipates that
development wells drilled in this accumulation will have initial production of
approximately 150 barrels per day and sustained production of 90 barrels per
day. Oil in place for a typical six metre pay section covering one square
kilometre (256 acres) in the Lower Centenario is approximately eight million
barrels. Petro Andina is currently developing the ECN and PP fields on 20 acre
spacing in areas that have four or more metres of pay and on 40 acre spacing
in areas that have up to four metres of pay.
The successful GAE wells are located two and one half, and five
kilometres southeast of the El Renegado discovery that Petro Andina announced
in August 2007. The GAE exploration wells may indicate that Petro Andina has
discovered a new field. However, in combination with the El Renegado wells it
appears likely that they have established a ten square kilometre extension of
the ECN trend.
During the final week of December the Company drilled the GAE x3
exploration well, located five kilometres to the east of the GAE x1 discovery.
The well encountered a Lower Centenario section without development of
reservoir sands, similar to wells that locally limit the updip extent of ECN
and PP. The GAE x3 well has been plugged and abandoned as a dry hole.
The Company is now scheduling additional exploration wells which will
define the extent of the resource to the southeast as well as testing other
exploratory prospects throughout the Company's land position.
A new contract drilling rig, built to Petro Andina specifications in
Canada, has been delivered to Argentina and is moving to the field. This will
bring the total available drilling fleet to six, four of which are on
multi-year contracts. Two of the rigs are contracted on a shorter term basis
to provide operational flexibility. The Company continues to dedicate one rig
exclusively to exploration drilling.
Currently, Petro Andina trucks all produced crude to market. In the third
quarter the Company commenced construction of an 81 kilometre pipeline to move
crude to market. At year-end approximately 60 kilometres of the pipeline, or
75 percent, had been welded and 42 kilometres, or 50 percent installed.
Commissioning of the pipeline is scheduled for the second quarter of 2008 and
is dependant on construction of a river crossing by the end of March. The
Company intends to drill a crossing under the river commencing in the second
half of January. To ensure that these drilling operations do not delay
commissioning, the Company has the option of refurbishing an existing bridge
to make a pipeline connection over the river. The cost of this connection,
should Petro Andina wish to use it, is estimated to be approximately
$1.5 million. The Company believes that it has adequate trucking capacity to
move all of its growing production to market until the pipeline is
The Company continues to move forward with implementation of its
waterflood projects at ECN and at its Jaguel Casa de Piedra (JCP) field,
20 kilometres northwest of ECN. At year-end eight waterflood patterns were
active at ECN, as well as three waterflood patterns at JCP. With the current
development plan, each waterflood pattern comprises six producing wells
surrounding an injection well, and when full waterflood development has been
completed the ratio of producers to injectors will be 2:1. The eleven
injectors on line at year-end were injecting 7,000 barrels of water per day
(gross). During the fourth quarter the Company commenced re-injecting produced
water from the ECN field.
The steam injection pilot project at the Cerro Huanul Sur (CoHS) field
has the potential to demonstrate significantly higher oil recovery rates. The
first well in the pilot commenced injection October 31st, completed its
initial steam cycle on December 6th, and at year-end was flowing oil and
water. The second well commenced injection on December 9th and at year-end was
converted to flow back. Injection in the third well of the pilot should
commence in early January. Petro Andina anticipates that initial data on
reservoir performance will be available by the second quarter.
Petro Andina has completed the acquisition of 3D seismic data covering
the GA III Block. These data are being interpreted and used for selection of
exploratory well locations. Additionally, at year end 3D seismic acquisition
was underway on the CNQ 7 Block, which the Company operates with a
47.5 percent working interest.
About Petro Andina Resources Inc.
Petro Andina is engaged in the exploration for and development and
production of oil and natural gas in Argentina and, to a lesser extent, in
Canada. The Corporation is continuing to develop its existing reserves and to
conduct appraisal and exploration drilling on its 529,000 acre (297,000 acre
net) land position in the Neuquen basin. Petro Andina is headquartered in
This news release does not constitute an offer to sell securities, nor is
it a solicitation of an offer to buy securities, in any jurisdiction. All
sales will be made through registered securities dealers in jurisdictions
where the offering has been qualified for distribution. The securities offered
are not, and will not be, registered under the securities laws of the United
States of America, nor any state thereof and may not be sold in the United
States of America absent registration in the United States or the availability
of an exemption from such registration.
The Toronto Stock Exchange has not received and does not accept
responsibility for the adequacy or accuracy of this news release.
Certain information set forth in this press release, including a
discussion of future plans and operations, contains forward looking statements
that involve substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and uncertainties,
some of which are beyond management's control, including but not limited to,
the impact of general economic conditions, industry conditions, fluctuation of
commodity prices, fluctuation of exchange rates, environmental risks, industry
competition, availability of qualified personnel and management, stock market
volatility, timely and cost effective access to sufficient capital from
internal and external sources. Actual results, performance or achievement
could differ materially from those expressed in or implied by these
forward-looking statements. For more information please contact Petro Andina
For further information:
For further information: Melesia Kasha, Investor Relations, Petro Andina
Resources Inc., Phone: (403) 237-1700, Fax: (403) 265-8216; William R.A. Hogg,
Vice President, Finance and Chief Financial Officer, Petro Andina Resources
Inc., Phone: (403) 237-1701, Fax: (403) 265-8216