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CALGARY, Dec. 29, 2014 /CNW/ - Petro-Victory Energy Corp. ("Petro-Victory" or the "Company") (TSX-V: VRY)
- Test of Santa Rosa Formation confirms presence of hydrocarbon accumulation plus associated condensate in the greater Lapacho area
- Light oil/condensate encounter confirmed at the shallower Icla Formation at Lapacho by logs and cores. However, a valid flow test was not possible due to suspected bore hole annulus communications with overlying Pirgua formation
As previously announced on the Press Release dated Dec. 10, 2014, the Lapacho well reached TD at 4,543m in the Santa Rosa Formation, the primary pre-drill target, with 418m of the 600m target interval drilled. Hydrocarbon shows have been encountered throughout the gross formation thickness extending right to TD, with background gas of up to 20% and trip gas of up to 48% (C1-C5 gas present). The full logging program was restricted due to difficult downhole conditions. However, from the logs obtained, Lapacho x-1 penetrated 54m of clean sandstones with individual sand bed thicknesses up to 10m, most of which appear to be hydrocarbon bearing. Additional sandstone, estimated from seismic to be approximately 30m+, may exist in the undrilled target interval section below current TD, which would result in a total thickness of more than 80m of Santa Rosa reservoir sandstone at this location.
Now, Petro-Victory's 2014 drilling campaign comes to an end marking a major achievement, having demonstrated the presence of previously unknown Paleozoic hydrocarbon bearing formations in the Pirity Basin of the Paraguayan Chaco. This is a critical first step in value creation for Petro-Victory's shareholders, for the government of Paraguay and other stakeholders.
Petro-Victory considers it has encountered hydrocarbons in two separate reservoirs (Santa Rosa and Icla) which, when combined with the source rock evidence at Jacaranda well, substantially de-risks its Pirity Block asset.
The Icla hydrocarbon encounter, as defined by logs at Lapacho, needs a definitive flow test to establish commerciality and potential flow rates. However, there is an additional thickness of Icla Formation in the Jacaranda prospect and management estimates a thickness in excess of 50m for the Icla pay zones with important Prospective Resources at a high chance of success.
In addition, Petro-Victory and Operator have previously delineated a Cretaceous play fairway in the Pirity Concession as a direct extension of the proved Palmar Largo oilfield trend in adjacent Argentina, including the drill-ready Tapir prospect. The Cretaceous play fairway in Paraguay has been described in the RPS Independent Audit Report of Prospective Resources initially performed for Operator dated January 23rd, 2014, and then for Petro-Victory dated May 19th, 2014.
"We are very proud of our 2014 drilling campaign. The giant Lapacho structure has been shown by drilling and logging to contain hydrocarbon bearing formations in both the Silurian Santa Rosa and Devonian Icla Formations. I am confident that Petro-Victory has established the presence of a large potential new resource base, and by applying the increased learnings and understanding gained so far, we will move forward to plan the 2015 drilling program to unlock full block potential." (Richard F. Gonzalez, Petro-Victory Energy Corp., CEO and Chairman)
Petro-Victory (36% WI) provides an update on testing of the Silurian Santa Rosa and Devonian Icla reservoirs in the Lapacho well. For the Santa Rosa, the difficult hole conditions experienced during the drilling of the well had prevented a liner being run in the 6" hole and an open hole test was performed. This was followed by a cased hole test of the Icla.
The Santa Rosa Test
The test was conducted with the tubing tailpipe just inside the 7" casing at 4020m and drilling mud in the open hole (well TD at 4543m). The tubing was circulated to diesel to create the underbalance and well was opened up. The well initiated flow at a rate of 107 barrels per day but the test had to be prematurely terminated after a cumulative production of only 14.2 barrels of fluid returns due to a serious mechanical failure in the bottom of the test string that prevented inflow.
After retrieving the test string and confirming the blockage, a check trip was performed and elevated gas readings of greater than 20% total gas (including C1-C5) were encountered throughout the cased and open hole sections until the bit held up due to hole conditions. This demonstrates that the well flowed gas and condensate, a view further reinforced by the significant gas shows through the open hole drilling operations, as previously announced.
Given the deteriorating hole conditions and high risk of hole collapse under an extended testing program, it has been decided to not attempt to repeat the test but to suspend the open hole section for later re-drilling by side tracking, learning from the downhole conditions experienced, and running a liner.
Management View of the Santa Rosa Test
In management's view the Lapacho x-1 drilling and test has demonstrated the following with respect to the Santa Rosa Formation:
- 58m of clean sandstones penetrated and based upon seismic, significant additional sandstone, some 30m+, expected in the undrilled target interval section below current TD, indicating a total probable thickness of more than 80m at this location.
- The three way dip closure at Lapacho is part of a much larger regional sub-crop trap, as described in the RPS Independent Audit Report of Prospective Resources, initially performed for Operator (dated 12th June 2014), and then performed for Petro-Victory (dated July 28th, 2014). Assuming a total of 80m of stacked sand pay zones and the figures in the RPS Independent Audit Report, then the Lapacho three way dip closure contains gross prospective resources of approximately 1 TCF gas plus associated condensate. Lapacho x-1 well has therefore confirmed the presence of a very significant accumulation of hydrocarbons plus associated condensate in the greater Lapacho area.
The Icla Test
The test was performed over the two oil bearing sands at 3926-3953m as previously announced on the Press Release dated October 20th, 2014. The operation was carried out using a Schlumberger drill stem test string and underbalanced 4.5" TCP perforation guns. During two flow periods a total of 110 barrels of gas cut formation water with average salinity of 80,000ppm with no traces of oil were obtained. The water salinity is characteristic of the overlying Cretaceous Pirgua Formation above 3,915m and not characteristic of the lower salinity Icla Formation (35,000-50,000ppm).
Management View of the Icla Test
The Icla test is not a valid test of the Devonian hydrocarbon bearing interval, previously evaluated using a full suite of wireline logs, complemented by hydrocarbon bleeding side wall cores. The cementation of the 7" liner was executed successfully but the cement bond log (CBL-VDL) shows poor quality cement over the Cretaceous Pirgua Formation which immediately overlies the Icla Formation. Although the cement bond log shows good cement over the Icla perforation interval, it is concluded that communication exists with the overlying highly permeable Cretaceous Pirgua sands. Given the cost of mobilizing equipment for a squeeze job and generally low chance of success of these operations, the interval was suspended for a future re-entry.
Lapacho x-1 drilling and logging has demonstrated the following with respect to the Icla Formation:
- Combined net sand thickness of 20m, with an average porosity of 6% and 60% oil saturation (using a water salinity of 50,000ppm).
- Logging shows the extensive development of conductive natural fractures. Side wall cores were bleeding live oil and hydrocarbon type appears to be light oil and condensate.
Given the resource potential at the Pirity Block, management will engage in discussions with potential strategic industry partners, to unlock the full value of our asset. The QG1 rig will be released with a view to resume the drilling program on high graded prospects in the summer of 2015.
The 2014 drilling campaign has drilled two wells which have demonstrated the presence of a new Paleozoic hydrocarbon province in the Pirity Basin of the Paraguayan Chaco. The Company is a non-operating partner in the two million acre Pirity Block.
Petro-Victory Energy Corp. is a publicly held British Virgin Islands oil and gas exploration company focused on Latin America with administrative headquarters based in Fort Worth, Texas, United States.
This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States unless an exemption from such registration is available.
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.
Advisory Regarding Forward-Looking Statements
In the interest of providing Petro-Victory's shareholders and potential investors with information regarding Petro-Victory, including management's assessment of Petro-Victory's future plans and operations, certain statements in this press release are "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "forward-looking statements"). In some cases, forward-looking statements can be identified by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "intend", "may", "objective", "ongoing", "outlook", "potential", "project", "plan", "should", "target", "would", "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this press release speak only as of the date thereof and are expressly qualified by this cautionary statement.
Specifically, this press release contains forward-looking statements relating to but not limited to: our business strategies, plans and objectives, and drilling, testing and exploration expectations. These forward-looking statements are based on certain key assumptions regarding, among other things: our ability to add production and reserves through our exploration activities; the receipt, in a timely manner, of regulatory and other required approvals for our operating activities; the availability and cost of labour and other industry services; the continuance of existing and, in certain circumstances, proposed tax and royalty regimes; and current industry conditions, laws and regulations continuing in effect (or, where changes are proposed, such changes being adopted as anticipated). Readers are cautioned that such assumptions, although considered reasonable by Petro-Victory at the time of preparation, may prove to be incorrect.
Actual results achieved will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. These and additional risk factors are discussed in our Final Prospectus dated July 11, 2014, as filed with Canadian securities regulatory authorities at www.sedar.com.
The above summary of assumptions and risks related to forward-looking statements in this press release has been provided in order to provide shareholders and potential investors with a more complete perspective on Petro-Victory's current and future operations and such information may not be appropriate for other purposes. There is no representation by Petro-Victory that actual results achieved will be the same in whole or in part as those referenced in the forward-looking statements and Petro-Victory does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.
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SOURCE: Petro-Victory Energy Corp.
For further information: Petro-Victory Energy Corp., Richard F. Gonzalez, CEO - 972-239-3084; Petro-Victory Energy Corp., Mark Bronson, CFO and Corporate Secretary - 817-838-4744; Brisco Capital Partners Corp., Scott Koyich, - 403-619-2200