Oromin Explorations Ltd.
TSX VENTURE : OLE
OTC Bulletin Board : OLEPF

Oromin Explorations Ltd.

July 09, 2008 08:30 ET

Oromin Announces Prospective Oil Resources at Its Santa Rosa Prospect in Argentina

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 9, 2008) - Oromin Explorations Ltd. ("Oromin" or the "Company") (TSX VENTURE:OLE)(OTCBB:OLEPF) is pleased to announce the receipt of an independent report (the "Santa Rosa Evaluation") from Aeon Exploration Inc. of Calgary, Alberta ("Aeon") that provides an evaluation of prospective resources with respect to its 100% owned CCyB-9 Santa Rosa exploration permit and exploitation concession on a property located in the Cuyana Basin in the Province of Mendoza, Argentina. The independent report concludes that the unrisked probabilistic recoverable oil resource potential for the Santa Rosa project ranges from 45,167,000 barrels of oil to 380,800,000 barrels of oil, and sets out 131,564,000 barrels of oil as the most likely amount of recoverable resources on the prospect. The Company emphasizes that the Santa Rosa project is a wildcat prospect, and the top of the dome structure target has not been drilled.

Summary of Santa Rosa Evaluation

The Santa Rosa Evaluation is authored by three independent consultants of Aeon: Robert O. Potter, P. Geol., Kenneth J. Drummond, P. Geol., and Andrew M. Ilnycky, P.Eng., all registered in the Province of Alberta. The report has been prepared in accordance with Sections 5.9 and 5.10 of National Instrument 51-101, and is based upon the authors' review of technical data including geology, geophysics and reservoir parameters.

The report also provides an economic evaluation, presented in the form of net operating income and net cash flow over the expected 25 year life of the hydrocarbon rights. Numerous scenarios are presented, using discount rates ranging from 0% to 20%. Using a discount rate of 10%, the report estimates net present values ranging from $764.4 million to $6,542.3 million, and sets out $2,305.0 million as the most likely NPV. (All dollar amounts in the report and this release are in U.S. dollars.) The NPV amounts are unrisked net present values of probabilistic recoverable oil resources. The economic analyses were conducted using the price of $42 per barrel, which is a capped price currently in effect under Argentinean regulations. In accordance with Section 5.6 of NI 51-101, the Company declares that the estimated values disclosed do not represent fair market value.

Norman Haimila, Ph.D., director and VP Explorations - Petroleum of the Company, stated, "This robust valuation of the prospective resources at the Santa Rosa Block strongly encourages Oromin to drill the necessary wells to test the prospect in a rapid time frame. We are working closely with government and industry participants in Mendoza towards drilling up to three test wells, which we expect to take place in the first quarter of 2009."

The evaluation of resources for non-producing oil prospects is a complex engineering task. The full Santa Rosa Evaluation is available on the Company's website www.oromin.com and filed on SEDAR. We recommend that readers refer to the Santa Rosa Evaluation in its entirety. On our website, the report is at "Investors/Articles and Reports". We have prepared a summary of the key assumptions which have been applied to the technical data in the report in Appendix A on page 4 of this news release. Readers are also referred to Appendix B - Glossary of Technical and Other Terms and to the Cautionary Statement on page 5 of this release.

The resources described in the Santa Rosa Evaluation and in this release are "undiscovered resources" as defined in the COGE Handbook. Undiscovered Resources are defined as those quantities of oil and gas estimates on a given date to be contained in accumulations yet to be discovered. The estimate of the potentially recoverable portions of undiscovered resources is classified as prospective resources. Prospective resources are defined as those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. They are technically viable and economic to recover.

In accordance with Section 5.9 of NI 51-101, the Company declares that there is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Summary of the Santa Rosa Dome Prospect

The Company's wholly-owned subsidiary Exploraciones Oromin SA holds its interest in the permit and the exploitation concession pursuant to Decree 1018/2008 of the Province of Mendoza, issued on May 2, 2008 (the "Decree"). The Santa Rosa CCyB-9 Block is covered by the Decree for the exploration for hydrocarbons comprising 7,694 km2 situated over the Santa Rosa Dome centered around latitude 33 degrees 15' South and longitude 67 degrees 40' West, extending from 52 km to 130 km east of the city of Mendoza, and approximately 100 km north from the River Tunuyan, in the Province of Mendoza, Argentina (the "Santa Rosa Dome Prospect" or "Santa Rosa Block").

The Santa Rosa Block is situated on the gentle eastern slope of the Andes. The western side of the block is approximately 600 meters above sea level. Local elevations only vary about 10 meters over fairly large areas. Most of the block consists of scrub brush covering low stabilized dune fields. The block is located on the east side of the Cuyana Basin, a geological district of approximately 161,000 km2, which exhibits maximum sediment thickness of 4,000 to 4,500 meters.

The western portion of the Cuyana Basin exhibits two north-south trending productive anticlines with 18 established oil pools which have produced 1,287 million barrels of oil to December 31, 2003. This oil is interpreted to have been sourced from "kitchens" associated with the Cacheuta formation.

The geological model which forms the basis for the prospectivity of the Santa Rosa Dome Prospect hypothesizes that hydrocarbons generated to the east of the axis of the depocentre of the Cuyana Basin would have migrated east from the kitchen into a large regional arch and dome between the Cuyana and San Luis Basin - that is, onto the Santa Rosa Block. Hydrocarbons could be structurally and stratigraphically trapped along the western flank and on the crest of the Santa Rosa Dome.

The geological model is supported by seismic evidence and test well results. Seismic evidence includes 1) 1,129 km of regional two-dimensional seismic acquired by YPF in the early 1980's forming a regional grid approximately 20 km by 20 km over most of the block and a more closely spaced grid approximately 3 km by 3 km over the southwest corner of the block, and 2) four lines of two-dimensional seismic data acquired, processed and interpreted by Oromin in 2001 and 2002.

Test well evidence includes one well, the Jaguel la Esperanza x-4, drilled in 1963 by YPF to total depth 2,031 meters along the southern boundary of the block, and, on the Santa Rosa Block itself, two wells drilled by Chauvco Resources Ltd.; 1) the Santa Rosa Este x-1001 drilled in 1994 to total depth 1,376 meters, and 2) the Santa Rosa x-2 drilled in 1995 to a total depth of 2,078 meters. Single mud log hydrocarbon gas shows were recorded in both the SR Este x-1001 and the SR x-2 wells. Both hydrocarbon shows could be related to migration from the kitchen, located to the west, eastward into the Santa Rosa Block.

Based on interpretation of regional and local geology, of the seismic evidence, and of the test well evidence, the geological model sets out the potential for multiple types of stratigraphic and structural hydrocarbon traps. Seismic and well data also indicate that some of the reservoir rocks which are oil-producing in the west side of the Cuyana Basin are present in the dome structure on the Santa Rosa Block in the east side of the basin.

Exploration risk

The Santa Rosa Evaluation provides a discussion assessing the probability of geological success in undertaking a test well program on the Santa Rosa Dome Prospect. The risk factors in assessing the probability are associated with source rock risk, migration risk, reservoir rock risk, closure risk, and containment risk, each of which are discussed in the Santa Rosa Evaluation. A negative outcome from any one of, or a combination of, these risk factors has the potential for a failure to discover economic concentrations of hydrocarbons. The report states, among numerous other matters, "The most significant risk to the play is the identification of a drillable closure due to the limited amount of seismic data. The closure probability could be significantly improved by additional technical data bases - gravity, aeromagnetics, satellite imaging, surface geochemistry and/or seismic."

Drilling plan for 2009

The Company has commenced environmental reviews, has completed satellite imagery, and is otherwise engaged in upgrading the technical data bases as described in "Exploration risk" above. This further includes seeking to obtain certain additional seismic data believed to exist with government agencies, and plans to conduct limited additional geophysical/seismic studies on the Company's own account, all preparatory for establishing definitive locations for up to three test wells expected to be drilled in the first quarter of 2009.

The preceding summaries of the Santa Rosa Dome Prospect and of the Exploration Risk are by their nature abbreviated summaries only, of the much more extensive technical description contained in the Santa Rosa Evaluation. We recommend that readers refer to the Santa Rosa Evaluation in its entirety. Readers are also referred to Appendix A - Summary of Key Assumptions, to Appendix B - Glossary of Technical and Other Terms, and to the Cautionary Statement on page 5 of this release.

Letter of Intent with Otto Energy Limited

As disclosed in the Company's regulatory filings since 2005, Otto Energy Limited ("Otto"), a public company listed on the Australian Stock Exchange, executed a Letter of Intent with the Company which enables it to earn up to a 41.24% working interest in the Santa Rosa Dome Prospect, in two stages, by the expenditure by Otto of a total of US$ 2,297,381. Otto's participation is subject to the completion of legal and financial due diligence to Otto's satisfaction, and to the settlement and execution of a joint venture agreement respecting the project. Each of these pre-conditions is currently under way. Otto's expenditure would be applied towards the programs referred to above under "Drilling plan for 2009".

Other information

Robert O. Potter, P.Geol., is the principal author of the Evaluation of Prospective Resources, and is an independent "qualified reserves evaluator" for the purposes of National Instrument 51-101. Mr. Potter has reviewed the summary of the evaluation report and of the exploration risk disclosed in this news release and has provided his consent to their inclusion.

Dr. Haimila is also a "qualified reserves evaluator" for the purposes of National Instrument 51-101. Dr. Haimila, who is not independent of the Company, has reviewed the summary of the Santa Rosa Dome Prospect disclosed in this news release and has provided his consent to its inclusion. Dr. Haimila is a member of the American Institute of Petroleum Geology and the American Association of Petroleum Geologists.

On behalf of the Board of Directors of OROMIN EXPLORATIONS LTD.

Chet Idziszek, President

Evaluation of Prospective Resources

Santa Rosa Oil Prospect, Province of Mendoza, Argentina

APPENDIX A - Summary of Key Assumptions

1. Report date July 3, 2008.

2. Effective date of economic estimates January 1, 2009.

3. Production life is 25 years, corresponding to the Exploitation period in Decree 1018/2008. Resources assumed recovered through primary recovery only.

4. Economics are presented on a 100% interest. Provincial royalty rate 15%. Production also subject to a 1% gross overriding royalty to Dr. Haimila.

5. Production development area ranges from 30 km2 to 120 km2. Projected initial production rates range from 225 barrels per day per well to 475 bpd per well. Number of potential wells ranges from 61 to 250. Potential resources recovered range from 45,000,000 to 380,800,000 barrels oil.

6. Capital costs for wells range from $45.8 million to $187.5 million; for gathering equipment and batteries, from $33.1 million to $135.5 million; for field facilities, $4.0 million; for costs of abandonment, $6.1 million to $25.0 million; potential pipeline cost (certain scenarios only) $40.0 to $60.0 million.

7. Abandonment costs assumed at $100,000 per operating well. An abandonment fund is created during the life of the project, with an annual provision for abandonment taken at 5% of any prior year's positive net income before taxes and depreciation until the abandonment fund is fully funded.

8. Costs of operations assumed at $2,500 per well per month. Facility operation cost assumed at $5,300 per well per month.

9. Capital cost assumed to be carried forward and written off against future income for a period of five years, as provided under the Argentinean fiscal regime.

10. Argentinean regulated price of oil assumed to remain constant at $42.00 per barrel over life of project. The full report provides a sensitivity case assuming $60.00 per barrel.

11. Production is assumed to be marketed at a point of delivery to Repsol YPF's refinery at Lujan de Cuyo. Production will be trucked to a gathering pipeline approximately 80 km distant until field production reaches 15,000 BOPD (if attained), at which point a pipeline would be warranted. Capital and operating costs of pipeline assumed to be recovered through a cost of service model over a life of 20 years.

12. Santa Rosa oil production assumed to have an API gravity of 33 degrees and low sulphur. Reference crude for pricing purposes is West Texas Intermediate with assumed API gravity of 40 degrees and 0.5% sulphur.

13. Revenues from gas assumed to be zero.

14. The economic evaluation was run for constant prices and costs in 2008 dollars.

Evaluation of Prospective Resources

Santa Rosa Oil Prospect, Province of Mendoza, Argentina

APPENDIX B - Glossary of Technical and Other Terms

Anticline: A fold in a rock formation with strata sloping downward on both sides from a common crest. Can form a trap which will contain hydrocarbons over long periods of geologic time, awaiting discovery.

API gravity: A measure of the relative lightness or heaviness of a petroleum liquid. Light crude oil is defined as having API gravity higher than 31.1 degrees. (API: American Petroleum Institute)

CCyB-9: The official name of the Santa Rosa Block according to Argentine government agencies.

Cacheuta formation: A sedimentary stratum in the Cuyana Basin of central Argentina, composed of black shales with thin layers of tuffs in the lower and middle parts. The basal mudstones are highly bituminous and constitute the richest source rocks for hydrocarbons in the region.

COGE Handbook: The "Canadian Oil and Gas Evaluation Handbook" published by the Petroleum Society of the Canadian Institute of Mining, Metallurgy and Petroleum.

Depocentre: (In geology) The area within a sedimentary basin where the thickest amount of sediments have been deposited and/or preserved.

Kitchen: (In geology) A geological formation wherein by the combination of heat and pressure organic material is converted into hydrocarbons over periods of geological time.

National Instrument 51-101 or NI 51-101: "Standards of Disclosure for Oil and Gas Activities" - the specification established by the securities regulatory agencies in Canada for statutory disclosures related to oil and gas assets.

Reservoir rocks: Rock formations capable of hosting hydrocarbons in place.

YPF: YPF S.A., a major Argentinean integrated oil and gas corporation, since 1999 part of RepsolYPF, a major international integrated oil and gas company.

Cautionary Statement

This document contains "forward-looking statements" within the meaning of applicable Canadian securities regulations. All statements other than statements of historical fact herein, including, without limitation, statements regarding the potential for the discovery of hydrocarbon resources, and our exploration plans and our other future plans and objectives, are forward-looking statements that involve various risks and uncertainties. Such forward-looking statements include, without limitation, estimates of exploration investment and the scope of exploration programs. There can be no assurance that such statements will prove to be accurate, and future events and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed in the Company's documents filed from time to time via SEDAR with the Canadian regulatory agencies to whose policies we are bound. Forward-looking statements are based on the estimates and opinions of management on the date the statements are made, and we do not undertake any obligation to update forward-looking statements should conditions or our estimates or opinions change, except as required by law. Forward-looking statements are subject to risks, uncertainties and other factors, including risks associated with mineral and hydrocarbon exploration, price volatility in the commodities we seek, and operational and political risks. Readers are cautioned not to place undue reliance on forward-looking statements.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this release.

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