Petrominerales Ltd.

Petrominerales Ltd.
Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

February 28, 2008 20:39 ET

Petrominerales Announces Record Year End Results and Reserves

BOGOTA, COLOMBIA--(Marketwire - Feb. 28, 2008) - Petrominerales Ltd. (TSX:PMG) ("Petrominerales" or the "Company"), 76.5% owned subsidiary of Petrobank Energy and Resources Ltd. (TSX:PBG)(OSLO:PBG) ("Petrobank"), is pleased to announce record fourth quarter and year-end financial and operating results, a 51% increase in proved plus probable reserves and a 152% increase in proved plus probable NPV discounted at 10% (before taxes) to US$1.3 billion.

(All further references to $ are United States dollars unless otherwise noted)


Total proved plus probable reserves in Colombia have increased by 51%, based on the DeGolyer and MacNaughton ("D&M") evaluation as at December 31, 2007. All reserves stated herein are based on forecast prices and costs and are company interest reserves after Ecopetrol's (the State oil company) share, and before royalties. D&M's work incorporates an update of their comprehensive geological and petrophysical evaluation of the Corcel, Orito, Neiva and Joropo properties. The evaluation does not include any reserves associated with our remaining 13 exploration blocks.

Summary results of the D&M report are highlighted as follows:

- Total proved reserves increased by 52% to 20.6 million barrels.

- Total proved plus probable reserves increased by 51% to 37.0 million barrels.

- Total proved, probable and possible reserves increased by 53% to 51.9 million barrels.

- Total proved plus probable NPV 10% (before taxes) increased 152% to $1.3 billion (3P - $1.8 billion).

- Proved plus probable reserve additions replaced 815% of 2007 production.

- Total proved plus probable F&D costs, including expenditures incurred on exploration blocks, and changes in future development costs were $21.74/bbl in 2007.

Reserves - Company Interest
Light and Medium Oil (mbbl)
Developed Producing 9,118
Total Proved 20,597
Total Proved + Probable 36,977
Total Proved + Probable + Possible 51,930

Reserve Reconciliation Proved +
Total Proved + Probable +
Proved Probable Possible
December 31, 2006 reserves 13,563 24,531 33,906
2007 production (1,740) (1,740) (1,740)
Net additions 8,774 14,186 19,764
------------- ------------------------------------
December 31, 2007 reserves 20,597 36,977 51,930
Year over year increase in reserves 52% 51% 53%
Production replacement 504% 815% 1,136%

Net Present Value Before Tax ($ millions)
0% 5% 10% 15%
Proved Developed Producing 558.8 497.3 447.9 415.5
Total Proved 1,091.7 918.8 787.4 698.5
Proved + Probable 1,885.1 1,558.7 1,314.9 1,156.4
Proved + Probable + Possible 2,636.4 2,168.0 1,819.4 1,598.7

Net Present Value - After Tax - Forecast Prices ($ millions)
As at December 31, 2007
0% 5% 10% 15%
Developed Producing 470.0 420.1 379.4 352.1
Total Proved 814.1 690.9 596.4 531.1
Proved + Probable 1,291.8 1,070.8 905.1 794.3
Proved + Probable + Possible 1,745.3 1,435.0 1,204.2 1,053.2

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 in March.


In 2007 we launched a significant exploration campaign to position ourselves for long-term growth. The program was highlighted by our Corcel discovery which has resulted in significant increases in production. We continued our development at Orito and recent production increases have demonstrated our success leading into our 2008 development drilling program. Our financial and operating results for the fourth quarter of 2007 highlights significant increases over the fourth quarter of 2006 as follows:

- Crude oil production increased by 304%, averaging 9,575 barrels per day, mainly due to production from our Corcel discovery.

- Operating netbacks increased by 60% to $62.50/bbl.

- Funds flow from operations increased by 668% to $51.8 million.

- Net income increased by 778 percent to $23.5 million.

Financial and Operating Results

The following table provides a summary of Petrominerales' financial and operating results for the three and twelve month periods ended December 31, 2007 and 2006. Consolidated financial statements with Management's Discussion and Analysis (MD&A) are now available on the Company's website at and will also be available on the SEDAR website at

Three months ended Years ended
December 31, % December 31, %
2007 2006 change 2007 2006 (1) change
Financial ($000s,
except where noted)
Crude oil revenue 68,600 11,038 521 121,802 43,676 179
Funds flow from
operations (2) 51,778 6,745 668 85,883 28,789 198
Per share - basic
($) (3) 0.52 0.07 643 0.89 0.33 170
- diluted
($) (3) 0.50 0.07 614 0.88 0.33 167
Net income 23,491 2,677 778 47,551 14,798 221
Per share - basic and
diluted ($) (3) 0.23 0.03 667 0.49 0.17 188
Capital expenditures 37,216 23,617 58 143,022 73,365 95
Total assets 441,462 181,407 143 441,462 181,407 143
Working capital
(net debt) (2) 106,691 11,469 830 106,691 11,469 830
Common shares
outstanding, end of
period (000s)
Basic 100,289 95,000 6 100,289 95,000 6
Diluted (4) 108,854 98,051 11 108,854 98,051 11

Operating netback
($/bbl) (2)
Crude oil revenue 77.87 50.58 54 70.00 54.54 28
Royalties 7.88 4.05 95 6.55 4.38 50
Production expenses 7.49 7.35 2 7.16 6.87 4
Operating netback 62.50 39.18 60 56.29 43.29 30

Average daily crude
oil production (bbls) 9,575 2,372 304 4,767 2,194 117

Proved plus probable
reserves (mbbls) (5) 36,977 24,531 51
NPV 10% before tax ($
millions) 1,314.9 521.8 152
(1) Amounts in the periods ending on or before June 30, 2006 have been
translated and restated in United States dollars from the previously
reported Canadian dollar amounts. See "Change in Accounting Policy"
within Management's Discussion and Analysis ("MD&A").
(2) Non-GAAP measure. See "Non-GAAP Measures" section within MD&A.
(3) Assumed weighted average number of basic and diluted shares totalled
78,999,900 prior to incorporation on April 20, 2006. See "Formation of
the Company" within MD&A.
(4) Assumes 3,656,508 common shares will be issued upon conversion of the
Company's convertible debentures which were issued in December 2007.
(5) Company working interest before deduction of royalties.


Production has averaged 8,927 bopd in February 2008 which includes 4,929 bopd from Corcel. In April we plan to run electrical submersible pumps with capacities of 15,000 barrels of fluid per day in both our Corcel-1 and 2 wells which are expected to increase Corcel production. The high fluid rates concurrent with increasing water cuts will allow us to maximize the ultimate recovery of original oil in place.

We continue to test our Corcel-3 well. An additional 600 feet of geological section was drilled in Corcel-3 below what was previously thought to be economic basement. During the drilling of the additional section, we encountered sands with oil and gas shows before drilling was terminated and the decision to case the well was made. Three of these new intervals were evaluated, two unsuccessfully, and the interval from 12,449 feet to 12,461 feet was perforated and successfully tested 27 degree API crude oil at rates up to 760 bopd, with fluctuating water cuts. We have temporarily suspended this interval. The test interval from 12,240 to 12,258 in the lower Guadalupe has been tested and produced 100% water. We plan to test one additional uphole zone.

We then plan to drill our next Corcel well, Corcel-4, vertically on the crest of the structure. This will allow us to fully evaluate the potential of the lower zones encountered in Corcel-3 in a significantly up-dip location, access attic oil in the Guadalupe and Mirador zones, and drill a well all the way to economic basement. The lower sand unit in Corcel-3 was not seen in Corcel-1, as the well was not drilled deep enough but in Corcel-2 the lower sand is over 75 feet thick and approximately 95 feet structurally higher than the interval tested in Corcel-3. The Corcel-4 well is expected to be 150 feet up-dip of the Corcel-3 well. We also plan to drill the Corcel-C prospect as our next Corcel exploration well during the second quarter of 2008, after the surface location is constructed.

On our Joropo Block, the Ojo de Tigre-3 well has been completed in the Carbonera formation. We have perforated 17 feet of C7 sands and will begin production testing the well using a jet pump system within the next week.

Our Casanare Este-2 well reached a total depth of 10,570 feet on February 27. We plan to log the well over the next week.

Our first exploration well on the Las Aguilas Block, Conga-1, was drilled in late 2007, yielding a new pool discovery. While the well demonstrated non-commercial quantities of hydrocarbons in the Caballos zone, the primary formation in Orito, it was completed as an oil well in the lower Villeta formation. We plan to test additional up-hole Villeta potential in this well and test the Villeta zones in our closest Orito well, Orito-133, in 2008.

Our first phase seismic work commitments on our Llanos Basin heavy oil blocks are nearly complete and are now being interpreted. On the Chiguiro Oeste and Rio Ariari Blocks, we have competed shooting 576 kilometres of reconnaissance 2D seismic. On the Chiguiro Este Block, we are shooting a reconnaissance 2D program, and a 3D seismic program to better define two channel systems previously identified from 2D seismic. These programs are expected to be complete in early March.

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 76.5% owned by Petrobank (TSX/Oslo Bors: PBG).

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
    Petrominerales Ltd.
    Corey C. Ruttan
    Vice-President Finance and Chief Financial Officer
    (403) 750-4400 or 011 571 629 2701
    Petrominerales Ltd.
    Jack F. Scott
    Executive Vice-President and Colombian Country Manager
    (403) 750-4400 or 011 571 629 2701