Petrominerales Ltd.
TSX : PMG

Petrominerales Ltd.

May 06, 2008 22:29 ET

Petrominerales Announces First Quarter Results

BOGOTA, COLOMBIA--(Marketwire - May 6, 2008) - Petrominerales Ltd. ("Petrominerales") (TSX:PMG), a 76.4% owned subsidiary of Petrobank Energy and Resources Ltd. (TSX:PBG) ("Petrobank"), is pleased to announce our first quarter 2008 financial and operating results.

FINANCIAL & OPERATING HIGHLIGHTS (U.S. dollars, except where noted)

The following table provides a summary of Petrominerales' financial and operating results for the three month periods ended March 31, 2008 and 2007. Consolidated financial statements with Management's Discussion and Analysis ("MD&A") are available on the Company's website at www.petrominerales.com and will also be available on the SEDAR website at www.sedar.com.



Three months ended March 31, 2008 2007 % change
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Financial
(US$000s, except where noted)
Crude oil revenue 67,729 9,167 639
Funds flow from operations (1) 45,153 5,196 769
Per share - basic ($) 0.45 0.05 800
- diluted ($) 0.43 0.05 760
Net income 22,228 1,675 1,227
Per share - basic ($) 0.22 0.02 1,000
- diluted ($) 0.21 0.02 950
Capital expenditures 68,498 27,569 148
Total assets 465,892 187,238 149
Net working capital / (net debt) (1) 83,130 (10,904) -
Common shares outstanding, end of period (000s)
Basic 100,354 95,000 6
Diluted (2) 109,045 98,022 11
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Operations
Operating netback ($/bbl) (1)
Crude oil revenue 86.19 49.88 73
Royalties 8.22 3.99 106
Production expenses 10.82 7.04 54
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Operating netback (3) 67.15 38.85 73
Average daily crude oil production (bbls) 8,635 2,042 323
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(1) Non-GAAP measure. See "Non-GAAP Measures" section within MD&A.
(2) Assumes 3,656,508 common shares will be issued upon conversion of the
Company's convertible debentures which were issued in December 2007.
(3) Excludes hedging activities.


Highlights:

- Crude oil production increased by 323%, averaging 8,635 barrels per day ("bopd") in the first quarter of 2008, mainly due to production from our Corcel-A1, Corcel-A2, Orito-121 and Orito-161 wells.

- Operating netbacks increased by 73% to $67.15 per barrel in the first quarter of 2008.

- Funds flow from operations increased by 769% to $45.2 million.

- Net income increased by 1,227% to $22.2 million.

OPERATIONAL UPDATE

Production averaged 8,635 bopd in the first quarter of 2008, a 323% increase from the first quarter of 2007. The large increase is due to our ongoing development drilling program at Orito and our major discovery at Corcel. Corcel production averaged 4,811 bopd in the quarter and we have started to install electric submersible pumps with capacities of 15,000 barrels of fluid per day in our Corcel-A1 and A2 wells. The pump installation was completed in our Corcel-A1 well, but we experienced electrical and mechanical problems and as a result, we are attempting to pull the pump from the hole to remediate the problem. We then plan to move to our Corcel-A3 well and convert it to an injector well to handle produced water from the field. The Corcel-A3 has been producing from the lower sand interval from 12,449 to 12,461 feet with average production of 230 bopd in the month of April. After the Corcel-A3 conversion, we will upgrade the electric submersible pump in Corcel-A2, also to a capacity of 15,000 barrels of fluid per day.

The Nabors 816 rig is currently drilling the Corcel-A4 well at a depth of 11,530 feet with an expected total depth of 12,465 feet. This vertical well is being drilled on the crest of the structure which should allow us to access attic oil in the Guadalupe and Mirador zones and to fully evaluate the potential of the lower zones encountered in Corcel-A3, including the zone which is currently producing, in a significantly up-dip location.

We are now moving the Caroil-12 rig to Corcel to drill the Corcel-C1 exploration well, which is expected to spud in mid-May. We have secured this world class drilling rig for the next 18 months to support our ongoing Corcel and Guatiquia exploration and development drilling programs. Following the Corcel-C1 well we plan to drill the Corcel-D1 location with this rig.

Our production facilities at Corcel have now been upgraded to handle 70,000 barrels of fluid per day and we plan a further expansion to 120,000 barrels per day by year end. The permanent production facilities capable of initially handling 180,000 barrels of fluid per day are expected to be completed in early 2009.

Orito

In Orito, our central block development drilling program is progressing with continued positive results. The Orito-121 well was put on-line in late January and was producing approximately 500 bopd. We have completed a workover to fracture stimulate additional upper zones, and to install a higher volume electric submersible pump and the well is now producing 620 bopd. Since January we have also drilled the Orito-168 and 162 wells and are currently drilling Orito-167. We have secured a new highly mobile drilling rig, Caroil-11, which is currently drilling the Orito-130 well, in the southwest extension area of the field. This rig is also under an 18-month contract and will support our ongoing development drilling program at Orito and will also drill our next Las Aguilas exploration well, Danta-1, south of Orito.

Casanare Este

Our Casanare Este-2 well reached a total depth of 10,570 feet on February 27, 2008. The well has been completed as a potential oil well and the first of three potential zones was completed with the drilling rig, but tested wet. The other two zones will be tested with a work over rig after testing our Mapache wells.

Mapache

On our Mapache Block, the first of two wells, Mapache-2, reached a total depth of 8,112 feet on April 9, 2008. The well has been completed as potential oil well in the Mirador and Carbonera formations. A total of six potential zones will be tested with a service rig. The second well on this block, Mapache-1, spud on April 24, 2008 and has been drilled, logged and will be cased as a potential oil well. The rig will now be moved to the Castor Block to drill our Castor-1 exploration well.

Joropo

On our Joropo Block, the Ojo de Tigre-3 well was completed in the Carbonera formation. We perforated 17 feet of C7 sands and the well produced 100% water. Upon further evaluation it appears we have poor cement bond in the well and a remedial cement squeeze will be required to properly isolate the prospective zones in the well. Due to the narrow drilling window during the Llanos Basin dry season, the work will be conducted later this year. We also performed a workover in the Ojo de Tigre-2 well to remove the screens and clean-out the perforated intervals, and then installed a jet pump completion. The well produced 1,532 barrels of fluid per day, with an 82% water cut, resulting in average production rates of 248 bopd, but the well could only be produced during the remainder of the dry season and has now been shut-in until later this year.

Seismic Acquisition

Our first phase seismic work commitments on our Llanos Basin heavy oil blocks are now complete and interpreted. On the Chiguiro Oeste and Rio Ariari Blocks, we have completed shooting 576 kilometres of reconnaissance 2D seismic. On the Chiguiro Este Block, we have shot a reconnaissance 2D program, and a 3D seismic program to better define two channel systems previously identified from 2D seismic. We are currently finalizing at least four drilling locations for our next exploration phase. Drilling on these blocks is expected to start in early 2009.

Our seismic acquisition crew has now moved to the Joropo area where we will be shooting a 121 square kilometre 3D seismic program over the Joropo, Jabali, Jaguar and both Altamira Blocks. When this program is completed we will commence the Guatiquia and Corcel programs where we plan to acquire 155 square kilometres of 3D seismic.

Management Changes

Mark Holliday, Vice President Operations, and Paul Kroshko, Vice President Exploration, have made the decision to leave Petrominerales to pursue other opportunities. Their resignations are effective June 30, 2008 and May 21, 2008, respectively. The Management Team and the Board of Directors of Petrominerales thank Mr. Holliday and Mr. Kroshko for their dedicated years of service to the organization and wish them all the best in their future endeavors.

Petrominerales Ltd.

Petrominerales Ltd. is a Latin American-based exploration and production company producing oil in Colombia with 15 exploration blocks covering a total of 1.6 million acres in the Llanos and Putumayo Basins. Petrominerales is 76.4% owned by Petrobank (TSX:PBG).

Forward-Looking Statements

Certain information provided in this press release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Specifically, this press release contains forward-looking statements relating to the timing of capital projects and the results of operations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in our Canadian securities filings. Such factors include, but are not limited to: general economic, market and business conditions; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; timing and rig availability, outcome of exploration contract negotiations; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; risks associated with oil and gas operations; and other factors, many of which are beyond the control of the Company. 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.
    John D. Wright
    President and Chief Executive Officer
    (403) 750-4400 or 011 571 629 2701
    or
    Petrominerales Ltd.
    Corey C. Ruttan
    Vice-President Finance and Chief Financial Officer
    (403) 750-4400 or 011 571 629 2701
    or
    Petrominerales Ltd.
    Jack F. Scott
    Executive Vice-President and Colombian Country Manager
    (403) 750-4400 or 011 571 629 2701