Sagres Energy Inc.

April 21, 2010 08:00 ET

Sagres Energy Inc.: Rig Contracted for Guyana Drilling

CALGARY, ALBERTA--(Marketwire - April 21, 2010) - Sagres Energy Inc.. ("Sagres" or the "Corporation") (TSX VENTURE:SGI) is pleased to announce that the Canacol Energy Ltd., on behalf of the joint venture, has executed a contract with Tuscany South America Limited ("Tuscany") for the provision of the 1,500 horse power drilling rig #110 for the purpose of drilling the K-2 exploration well located in the Takutu Basin in Central Guyana. Tuscany commenced mobilization of the drilling rig from Oklahoma, USA to Guyana upon the execution of the contract. It is anticipated that the rig will arrive on location within 60 to 75 days, and that drilling will commence shortly thereafter. The Takutu PPL contains the Karanambo discovery well (K-1) which was drilled by Home Oil in 1982.

The joint venture plans to drill the K-2 well to a total depth of approximately 11,000 feet. The bottom hole location for the K-2 well will be approximately 400 meters northwest of the K-1 discovery well, and will target the same productive reservoirs that tested over 400 barrels of oil per day of 42o API light oil in 1982. Effective November 30, 2009, Gaffney Cline and Associates attributed gross mean recoverable prospective resources of 128 million barrels of oil to the Karanambo prospect in its report compiled for the Corporation. The joint venture to date has completed the construction of the drilling pad, access roads, and staging areas in preparation of drilling and has purchased and mobilized tubular and wellheads sufficient for 3 wells which are now in country and on location. The K-2 well is anticipated to take 50 days to drill and test, and, if successful, will be put on a long term production test to establish the deliverability and performance of the reservoir.

The joint venture includes Canacol Energy Ltd. (TSXV: CNE) who has a 90% working interest in the Takatu PPL. Sagres Energy Inc. (TSX VENTURE:SGI) has farmed into Canacol's interest and has the right to earn a 25% working interest in the PPL by paying 30% of the costs to drill the K-2 well to a maximum of USD$10 million (net USD$3 million to Sagres), and 27.5% of cash calls thereafter. To date Sagres has paid USD$1.25 million. Groundstar Resources Corp. (TSXV: GSA) has the remaining 10% working interest in the PPL.

About Sagres Energy

Sagres Energy Inc. is a Canadian based international oil and gas exploration company with an exploration portfolio in Guyana and Jamaica. The common shares of Sagres are listed for trading on the TSX Venture Exchange under the symbol "SGI".

Forward-looking statements

This news release contains forward-looking statements relating to the arrival of the drilling rig on location in Guyana, the commencement of drilling the K-2 well, expected drilling depth and bottom hole location of the K-2 well, the prospective resource estimate for the Karanambo prospect, the time estimated to drill and test the K-2 well and putting the K-2 well on long-term production. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the expectations, estimates, forecasts, and projections in the forward-looking statements will not occur. As such, readers are cautioned that actual performance and results in the future may differ materially from any estimates, expectations or projections of future performance or anticipated results expressed or implied by such forward-looking statements.

These assumptions include, among other things, assumptions regarding: the proper performance by Tuscany of its obligations under the contract for the provision drilling services; the accuracy and reliability of the geological and other data available to the Sagres' joint venture partners relating to the evaluation of the Guyana prospects and the exercise of professional judgment by Sagres' joint venture partners and Gaffney Cline and Associates regarding the interpretation and conclusions drawn from such data; the general stability of the economic and political environment in which Sagres operates; the timely receipt of any required regulatory approvals; the ability of Sagres and its joint venture partners to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which Sagres has an interest in to operate the field in a safe, efficient and effective manner; the ability of Sagres to obtain financing on acceptable terms; field production rates and decline rates; development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of Sagres to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Sagres operates; and the ability of Sagres to successfully market its oil and natural gas products.

Risks and uncertainties include, among other things: the risks and level of uncertainty associated with the recovery of the resources; risks associated with changes in general economic and market conditions, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserves and resources estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, and other risk factors outlined under "Risk Factors" contained in our joint management information circular dated March 8, 2010 and the appendices thereto.

Additional information on these and other factors that could effect Sagres' operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (

The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by law, Sagres disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Sagres undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

Resource estimates

The Karanambo resource estimate above is for prospective resources, which is defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. A copy of the Guyana Takutu Basin Evaluation of Gaffney Cline and Associates is included in Sagres' joint management information circular dated March 8, 2010 and may be accessed under Sagres' profile through the SEDAR website (

63,894,036 common shares issued

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.

Contact Information

  • Sagres Energy Inc.
    Jason Bednar
    Chief Financial Officer
    (403) 607-4607