CALGARY, Dec. 31, 2012 /CNW/ - Petromanas Energy Inc. ("Petromanas" or the "Company") (TSXV: PMI) today provided an update on its Albanian drilling program and its previously announced acquisition of Gallic Energy Ltd. ("Gallic") (TSXV: GLC).
The Juban-1 well was spud on November 23, 2012 and reached a depth of 1,716 metres on December 27, 2012. The hole was logged once this target depth was reached. Logging operations were completed December 30, 2012. Information gathered through the logging program indicated negligible quantities of hydrocarbons were present and the Company has decided to plug and abandon the well. Petromanas holds a 100% working interest in Blocks A-B and total costs to drill the well to a depth of 1,716 metres were approximately US$6.5 million, approximately two million dollars less than the US$8.6 originally budgeted.
The Shpirag-2 well reached the top of the target carbonate reservoir zone at approximately 4,750 metres in late December 2012. The Company has set casing to the top of the objective to put the less stable Flysch shale that overlies the target carbonate behind pipe. The well is now drilling ahead in the carbonate reservoir. Petromanas plans to penetrate the carbonate to sufficiently evaluate the reservoir potential. Testing is expected to follow reaching total depth. Total costs to drill the well to total target depth of 6,100 metres are estimated at US$44 million gross, US$9 million net to Petromanas.
"We drilled the Juban-1 well based on extensive geological analysis of potential analog structures with the hope of identifying commercially viable accumulations of hydrocarbons outside areas of current production," said Mr. Glenn McNamara, CEO of Petromanas. "Juban-1 was a high risk exploration well with an estimated chance of success of less than 20% since there is no existing petroleum system in northern Albania and, while this result is not what we hoped for, we believe we have been able to cost effectively obtain an initial assessment of the potential of this area. Our drilling program continues to advance with the Shpirag-2 well drilling ahead into the carbonate reservoir and we remain optimistic with respect to the potential of Blocks 2-3."
Petromanas has completed the Environmental and Social Impact Assessment (ESIA) and civil engineering work at two additional potential drilling locations on Blocks 2-3. Upon receiving environmental permits from the Albanian Government, the Company will apply for the required civil construction permits to build access roads and well sites as developments dictate.
Seismic contractor Geotec Spa of Italy completed shooting a test seismic line in mid-December and subsequently demobilized its crew. The test line will help determine the final shot parameters for the balance of the Company's 400-500 kilometre 2D seismic program, expected to be completed in late 2013. Petromanas and its partner are evaluating alternative shot hole depths and charge sizes to optimize data quality and manage costs. The test program results have the potential to reduce future seismic costs in the area.
Under the terms of the Company's Farm-Out Agreement with Royal Dutch Shell plc, Shell will carry the first $20 million dollars of this seismic program with any excess amount shared equally by both parties. Petromanas has concluded the tender process with contractors for the next stage of the seismic program and will be awarding the contract upon the conclusion of final negotiations with the preferred contractor.
Following ongoing discussions with the Albanian Government, Petromanas has requested and is awaiting approval of a one-year extension to complete its commitments for Period 2 under the Production Sharing Contract ("PSC") for Blocks D-E. In December, the Albanian Ministry of Economy, Trade and Energy ("METE" or the "Ministry") acknowledged receipt of the request and formally asked for a draft PSC amendment to be filed with the Ministry. Once METE approves the amendments to the PSC, it will be submitted to the Albania Council of Ministers for ratification. The Company previously provided the Albanian Government with a standby letter of credit for $6.3 million in support of its Period 2 performance guarantee, which remains in force. Once the extension is approved, Petromanas would have until December 25, 2013 to complete its obligations on Blocks D-E under the amended PSC. The Company intends to use the information gathered from its current drilling programs to determine how best to meet its commitments for Period 2. The Company considers Blocks D-E to be of higher risk than Blocks 2-3 and relatively costly to explore based on the lower prospective resource volumes allocated to the Papri prospect.
Petromanas is in the final stages of closing the previously announced business combination whereby Petromanas is acquiring 100% of the issued and outstanding class A shares of Gallic, in exchange for common shares of Petromanas, by way of a statutory plan of arrangement (the "Arrangement").
As previously disclosed, the Arrangement was approved by Gallic shareholders and warrantholders at a special meeting held on December 13, 2012. Gallic also received the final approval of the Court of Queen's Bench in respect of the Arrangement following its application to the Court on December 14, 2012. It is anticipated that the Arrangement will close later today. Information concerning the Arrangement is set out in Gallic's information circular (the "Circular") dated October 30, 2012 that was mailed to all Gallic shareholders and warrantholders. A copy of the Circular is available electronically under Gallic's issuer profile on SEDAR at www.sedar.com.
About Petromanas Energy Inc.
Petromanas Energy Inc. is an international oil and gas company focused on the exploration and development of its assets in Albania. Petromanas, through its wholly-owned subsidiary, holds three Production Sharing Contracts ("PSCs") with the Albanian government. Under the terms of the PSCs, Petromanas has a 100% working interest in Blocks A, B, D, and E and a 50% working interest in Blocks 2 and 3 that comprise more than 1.4 million gross acres across Albania's Berati thrust belt.
The foregoing information contains forward-looking information relating to the future performance of the Company, including but not limited to the timing and drilling of the Juban-1 and Shpirag-2 wells, the costs of drilling, the Company's current exploration activities, including the 2013 seismic program, the timing with respect to government permit applications, receipt of the one-year extension in respect of the Company's commitment for Period 2 under PSC on Blocks D-E, and the anticipated timing of the closing of the Arrangement. Forward looking information is subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in our forward looking statements. Such risks and other factors include, among others, the actual results of exploration activities, changes in world commodity markets or equity markets, the Company's ability to identify, attract, obtain and retain industry partners, access to capital, access to drilling rigs, seismic equipment and operational personnel, the risks of the petroleum industry including, without limitation, those associated with the environment, delays in obtaining governmental approvals, permits or financing or political risks in the completion of development or construction activities, title disputes, change in government and changes to regulations affecting the oil and gas industry, risks associated with exploration activities and other risks and uncertainties detailed from time to time in the Company's filings with the Canadian securities administrators (available at www.SEDAR.com). Forward-looking statements are made based on various assumptions and on management's beliefs, estimates and opinions on the date the statements are made. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking information contained herein. The Company undertakes no obligation to update forward-looking statements if these assumptions, beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.
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 release.
SOURCE: Petromanas Energy Inc.
For further information:
Glenn McNamara, CEO
Hamid Mozayani, COO
Bill Cummins, CFO
Petromanas Energy Inc.
Suite 1720, 734 - 7th Avenue SW
Canada T2P 3P8
Tel: +1 403 457 4400
Fax: +1 403 457 4480
The Equicom Group
300 - 5th Avenue SW, 10th Floor
Canada T2P 3C4
Tel: +1 403 218 2835
Fax: +1 403 218 2830