Petrominerales Ltd.

Petrominerales Ltd.

February 27, 2012 06:10 ET

Petrominerales Announces 2011 Year End Reserves and Provides Operational Update

CALGARY, ALBERTA--(Marketwire - Feb. 27, 2012) - Petrominerales Ltd. ("Petrominerales" or the "Company") (TSX:PMG)(BVC:PMGC) is pleased to announce the results of our independent year end reserves evaluation and provide an update on our operations in Colombia and Peru.


  • Our Tucuso-1 exploration well on our Mapache Block encountered 38 feet of potential net oil pay and we plan complete the well for production by the end of February;
  • We identified an initial 72 feet of potential net oil pay in our La Colpa 2X well in Peru;
  • Encouraging initial results from our Tatama-1 heavy oil horizontal well;
  • Since December, we nearly doubled our down-hole water disposal capacity on our Corcel Block;
  • Our Orito-193 well came on production at over 800 barrels of oil per day ("bopd") in a secondary target (Villeta formation) adding new reserves from 16 new development drilling locations and seven well recompletions;
  • We recommenced drilling our Corcel Block exploration prospects starting with Tente-1 and logs indicate 21 feet of potential net oil pay;
  • 2011 production averaged 38,378 bopd, a four percent increase over 2010;
  • At December 31, 2011, proved plus probable reserves totaled 51.5 million barrels with a net present value discounted at 10% of $2.3 billion.


Our independent reserves evaluators, DeGolyer and MacNaughton ("D&M"), completed an evaluation effective as at December 31, 2011 of the Company's Orito and Neiva properties in Colombia and portions of five of the Company's 15 exploration blocks, Corcel, Guatiquia, Casimena, Mapache and Castor. D&M's report did not include any evaluation of the Company's drilling prospects or remaining 1.7 million net acres of exploration land in Colombia or 5.4 million net acres in Peru. All reserves stated herein are based on forecast prices and costs and are Company interest gross reserves (before deducting royalties).

Company Gross Reserves Reconciliation (MBBL)
Proved Developed Total Proved Proved Plus
December 31, 2010 Reserves 27,075 43,986 60,222
2011 Production (14,008 ) (14,008 ) (14,008 )
Net Additions 9,325 1,818 5,282
December 31, 2011 Reserves 22,392 31,796 51,496
Year over year decrease in reserves (17 )% (28 )% (14 )%
Production replacement 67 % 13 % 38 %

Net Present Value of Future Net Revenue Before Tax (US$ Millions)(1)
0% 8% 10%
Proved Developed 1,411 1,235 1,200
Total Proved 1,896 1,525 1,454
Proved Plus Probable 3,061 2,390 2,262
1. Using forecast prices and costs.
Net Present Value of Future Net Revenue After Tax (US$ Millions)(1)
0% 8% 10%
Proved Developed 1,144 992 962
Total Proved 1,510 1,188 1,128
Proved Plus Probable 2,307 1,762 1,660
1. Using forecast prices and costs.
Reserves by Area (Company Gross MBBL)
Orito Neiva Central
Proved Developed 13,281 2,791 4,540 1,780 22,392
Proved Undeveloped - 6,136 2,330 938 9,404
Total Proved 13,281 8,927 6,870 2,718 31,796
Probable 7,688 8,864 1,207 1,941 19,700
Proved Plus Probable 20,969 17,791 8,077 4,659 51,496

The proved undeveloped reserves include the following:

  • Three wells in the Central Llanos (Yenac-4, 7, and 8);
  • 26 wells at Neiva; and
  • 25 wells at Orito.

The probable reserves include the following:

  • One well in the Deep Llanos (Corcel-A3 side-track);
  • Three wells in the Central Llanos (Capybara-2 side-track, Capybara-3, and Capybara-4);
  • Three wells at Neiva; and
  • 17 wells at Orito.
Future Net Revenue, Undiscounted, Forecast Prices and Costs (US$ Millions)
Revenue Royalty Operating
Total Proved 3,080 381 402 400 1,896 386 1,510
Proved Plus Probable 5,041 646 729 605 3,061 754 2,307

The 2012 estimated production based on the D&M report is 31,005 bopd for proved developed, 31,801 bopd for total proved, and 37,486 bopd for proved plus probable reserves.

The reserves and future net revenue were determined using the following price assumptions:

2012 $99.00 $106.00
2013 $99.96 $104.67
2014 $103.00 $105.42
2015 $106.12 $106.25
2016 $108.24 $106.08
Thereafter +2% per year +2% per year

The disclosures required in accordance with National Instrument 51-101 of the Canadian Securities Administrators will be available in the Company's Annual Information Form to be filed on the SEDAR website at prior to March 31, 2012. Estimated values of future net revenue disclosed in this press release do not represent fair market values.


Block 126, Peru

In Peru, we drilled our first exploration well, La Colpa 2X, to an initial depth of 7,870 feet. As we were drilling through the Copacabana formation, at depths ranging from 5,695 to 7,225 feet, we experienced indications of oil and significant drilling mud losses. After drilling through the entire Copacabana section to a depth of 7,870 feet, we suspended drilling operations to run logs and interpret well information obtained to-date. We ran open-hole logs, and to assist our petrophysical interpretation we used an MDT tool (modular formation dynamics tester tool) to obtain reservoir pressure measurements along with reservoir fluid samples. The primary objective was to validate the potential net hydrocarbon pay identified on logs. Based on our analysis, we estimate an initial 72 feet of net potential oil pay in three intervals of the Copacabana reservoir. We subsequently drilled the well to targeted depth of 8,392 feet. We plan to run open-hole logs over the remaining part of the hole and then case the well for production testing. We expect to have testing results by the end of April, subject to favorable weather conditions.

Our initial drilling plan for La Copla 2X had identified up to eight potential hydrocarbon formations. The following is a summary of the formations we have encountered to date:

Formation Result from original discovery well La Colpa 1X (1) Initial result from La Colpa 2X Note
Agua Caliente Logs indicate 26 feet of potential net oil pay; swab tested 44 barrels of 22 degree API oil Reservoir shaled out; Top Agua Caliente 12 feet structurally lower than La Colpa 1X
Cushabatay / Ene
Logs indicate 15 feet of net oil pay; formation not tested Penetrated reservoir with low permeability and appears wet 2
Copacabana Logs indicate 98 feet of potential net oil pay; DST(3) recovered 8 barrels of 26 degree API oil Found 72 feet of potential net oil pay 4
Tarma DST recovered 8 barrels of 30 degree API oil Acquiring logs
Ambo Logs indicate 24 feet of net oil pay; formation not tested Acquiring logs
Green Sandstone Logs indicate 10 feet of net oil pay; DST recovered 6 barrels of 32 degree API oil Acquiring logs
1. The original La Colpa 1X was drilled in 1989 by a prior land holder.
2. Potential exists for this reservoir to contain hydrocarbons elsewhere on the Block.
3. DST means Drill Stem Test, an open-hole test to obtain reservoir pressure and short-term flow test data.
4. To be production tested after the well is completed.

Following La Colpa 2X, we plan to move equipment to drill our Sheshea-1X prospect on the Block. The Sheshea prospect is an independent prospect from La Colpa and we are targeting multiple reservoir formations in the well.

Deep Llanos Basin (Corcel, Guatiquia and South Block 31), Colombia

We tested two exploration wells (Cobra-2, Jamuco-1) and in January, three more wells reached their targeted drilling depth (Iboga-1, Yatay-2, and Tente-1) and we drilled two additional Corcel water disposal wells.

Our Yatay-2 exploration well was drilled to a total measured depth of 11,690 feet on January 1st 2012. The Yatay-2 well targeted by-passed pay in the Guadalupe formation encountered in the original discovery well. The well was placed on production late January at 600 bopd.

On Block 31, we drilled our third exploration well, Jamuco-1, to a total measured depth of 14,464 feet on December 5th. Based on well logs indicating 52 feet of potential net oil pay in the Guadalupe, Lower Sand 1 and 2 formations we cased the well and completed a multi-zone testing program. During testing, we recovered trace amounts of hydrocarbons and have abandoned the well.

Our latest prospect on Block 31, Iboga-1, was drilled to total depth of 14,352 feet on January 2nd. Well logs indicate 42 feet of potential net pay in the Guadalupe and Lower Sand 2 formations. We tested the Lower Sand Formations and recovered 100 percent water. We have moved the completion rig to our Candelilla field to complete work-overs on our Candellilla-3 and 5 wells. We plan to test the remaining Guadalupe potential in Iboga at a future date. Iboga concludes our initial exploration drilling program on the southern portion of Block 31. We currently have our two drilling rigs operating on the Corcel Block. Our Tente-1 exploration prospect has been drilled to a total measured depth of 14,605 feet and well logs indicate 21 feet of potential net oil pay in the Guadalupe and Lower Sand 1 formations. We plan to case the well as a potential oil producer and expect to have test results from this well in early April. We began drilling our Chilaco-1 prospect January 29th, and we expect to have drilling results from this well in March.

Foothills Blocks (Blocks 25, 31, 59 and 15), Deep Llanos Basin, Colombia

We had drilled our Bromelia-1 prospect to 16,919 feet, 100 feet above the primary objective formation, when during an operation to remove the bottom-hole assembly from the well, the drill pipe parted resulting in a blockage of the well bore. After making attempts to recover the pipe and assessing the condition of the well bore, we determined a side-track well was necessary. We side-tracked the well at 12,000 feet and are currently drilling at 13,672 feet. We expect to reach our target depth and have initial drilling results in April. Following Bromelia, we plan to drill our second exploration prospect on Block 25, Canatua-1.

Central Llanos Basin (Casimena, Castor, Casanare Este, Mapache Blocks), Colombia

On our Casimena Block, we drilled our Yenac-5 appraisal well. As previously disclosed, well logs indicate 58 feet of potential net pay, 35 feet in the Upper Mirador formation and 23 feet in the Lower Mirador formation. Yenac-5 penetrated the top of the Mirador formation 10 feet structurally higher than in Yenac-3.

We placed Yenac-5 on production on January 31 and to date the well has averaged 1,773 bopd of 16 degree API oil. Our Yenac-6 well, which was placed on production December 27, 2011 at 1,500 bopd, was shut-in mid-January to install a gravel pack in the well. We placed the well back on production on February 17, 2012.

On our Mapache Block, we drilled the Tucuso prospect to 7,391 feet measured depth on February 6th. The well is located 20 kilometres southeast from our Disa oil discovery. Well logs indicate potential net hydrocarbon pay of 38 feet in four intervals, including 26 net feet in the Ubaque Formation. The well has been completed in the Ubaque Formation, and we plan to have the well on production by the end of February.

Llanos Basin Heavy Oil Blocks (Rio Ariari, Chiguiro Oeste, Chiguiro Este), Colombia

We drilled our first horizontal well, Tatama-1, near our Mochelo discovery on our Rio Ariari Block. The well was drilled to a total measured depth of 6,550 feet including a 1,000 foot horizontal section. The well was initially completed with 96 feet of blank pipe and 889 feet of screens (Meshrite™). In our initial production tests, the productivity of the well was significantly lower than that encountered in our original Mochelo-1 vertical discovery well. We pulled the liner and re-initiated a multi-rate production test resulting in oil rates between 150 and 250 bopd at water cuts ranging from 75 to 90 percent. Over 37 days of testing, the well produced an average of 107 bopd at a 79 percent water cut. Based on the Mochelo vertical well productivity, the horizontal well productivity is lower than we expected. We plan to run a slotted liner and production logs in the well to determine which portions of the well bore are contributing to production. Depending on the results of our production log analysis, we may extend the horizontal section of Tatama or drill a new multi-lateral well to improve overall well productivity and expected ultimate recoveries.

We recently completed the ninth stratigraphic well on the block, ES-42, which found 15 feet of potential net oil pay over the Paleozoic basement formation. The ES-42 well was based on a play concept developed from the interpretation of our 3D seismic. This result could further increase the prospective resource potential on the block. We plan to drill up to eight more stratigraphic wells targeting existing and new play concepts to identify and quantify the heavy oil potential of our Rio Ariari Block.

Orito, Putumayo Basin, Colombia

In January, we production tested the Orito-193 well, designed to test a part of the Orito Field with limited well spacing previously interpreted to be a non-productive area of the field. In the primary producing Caballos Formation, we encountered a high proportion of gas over oil, restricting our ability to produce the oil from this formation. In our secondary target, the Villeta Formation, we encountered 14 feet of net oil pay and production tested the well at over 800 bopd of 26 degree API oil on natural flow with less than a ten percent water cut. Based on this result, we have identified six existing Caballos Formation wells that can be reached in the Villeta Formation, including the Orito-126 well which we have already re-entered and are currently testing. In our 2011 reserve report, we have added 16 new Villeta development drilling locations. Petrominerales is entitled to 79 percent of the production, based on current R-factor calculations and before royalties, from new wells on the Orito Field.


Production averaged 33,511 bopd during the month of January, a seven percent decrease from December average of 36,041 bopd. Production was lower in the month primarily due to natural well declines and two wells off-line awaiting work-overs (Candelilla-3 and 5). In addition to having approximately 1,300 bopd off-line awaiting work-overs, we had 2,500 bopd of high-water cut wells shut-in on a temporarily basis awaiting expansion of our down-hole water disposal capacity. Since December, we have almost doubled our down-hole water injection capacity, and our current production is over 36,000 bopd. We still have approximately 2,400 bopd of production off-line due to operational work-overs or awaiting additional water-disposal capacity that we expect to bring back on production in early March.


Management of Petrominerales will be holding a conference call for investors, financial analysts, media and any interested persons on Monday, March 5, 2012 9:00 a.m. (Mountain time) (11:00 a.m. Eastern Time) to discuss our 2011 year-end and fourth quarter financial and operating results that will be released in advance of the call.

The investor conference call details are as follows:

Live call dial-in number(s): 416-695-6617 / 800-952-4972

Live audio webcast link:

Replay dial-in numbers: 905-694-9451 / 800-408-3053

Replay Pass code: 7233541

Petrominerales Ltd. is an international oil and gas company operating in Latin America since 2002. Today, Petrominerales is the most active exploration company and the fourth largest oil producer in Colombia. Our high quality land base and multi-year inventory of exploration opportunities provides long-term growth potential for years to come.

Forward‐Looking Statements. This press release contains forward-looking statements. More particularly, it contains forward-looking statements concerning potential exploration and development activities and expected production rates. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the availability of capital, the success of future drilling, completion, recompletion and development activities, the performance of existing wells, the performance of new wells, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to market our production, weather and access to drilling locations. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors; changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and exchange rate fluctuations and general economic conditions. Certain of these risks are set out in more detail in our Annual Information Form which has been filed on SEDAR and can be accessed at There is no representation by Petrominerales that actual results achieved during the forecast period will be the same in whole or in part as those forecast. Except as may be required by applicable securities laws, Petrominerales assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Contact Information

  • Petrominerales Ltd.
    Corey C. Ruttan
    President and Chief Executive Officer
    403.920.0124 or 011.571.629.2701 (FAX)

    Petrominerales Ltd.
    Jack F. Scott
    Chief Operating Officer
    403.920.0124 or 011.571.629.2701 (FAX)

    Petrominerales Ltd.
    Kelly D. Sledz
    Chief Financial Officer
    403.920.0124 or 011.571.629.2701 (FAX)