Petrominerales Ltd.

Petrominerales Ltd.
Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

November 29, 2010 00:05 ET

Petrominerales Caruto-1 Exploration Well Tests Over 10,000 bopd

BOGOTÁ, COLOMBIA--(Marketwire - Nov. 29, 2010) - Petrominerales Ltd. ("Petrominerales") (TSX:PMG), a 65% owned subsidiary of Petrobank Energy and Resources Ltd. (TSX:PBG), is pleased to provide an operational update highlighted by the successful test of our Caruto-1 well at over 10,000 barrels of light oil per day ("bopd").

Corcel & Guatiquia Blocks, Llanos Basin, Colombia

In the Northeast area of Corcel, we completed drilling our third exploration well, Caruto-1, on November 16, 2010. The well reached total measured depth of 13,024 feet and well logs indicated a total of 47 feet of potential net oil pay in the Lower Sand formation. An initial seven hour production test reported over 10,000 bopd of light 32 degree API oil at a zero percent water cut. This test result was achieved with an electric submersible pump ("ESP") operating at approximately 75 percent of the pump's maximum capacity. Due to facility and oil storage limitations at the well site, we turned off the ESP and have been producing the well on natural flow at a rate of 5,600 bopd. We are installing temporary facilities and expect to have the well producing at a controlled rate of 12,000 barrels of fluid per day within the following week. Additional facility capacity is expected to be available in mid-January. Based upon the log and test results, we are currently evaluating the possibility for follow-up drilling locations on the discovery. The Caruto-1 well results demonstrate the high-impact exploration opportunities present on our Llanos Basin blocks.

As disclosed in our third quarter update on November 2, 2010, the Boa-2 well was completed as an oil well. The well encountered the Lower Sand formation 10 feet structurally higher than in Boa-1, and was placed on production at an initial oil rate of 600 bopd.

We have completed drilling our Corcel-E2 well to a measured depth of 13,180 feet on November 27, 2010. We are currently running well logs and we expect to have production results by the end of December.

Currently, we have a third rig drilling in the area on a temporary basis. Our first rig is moving from Caruto-1 to drill our Cardenal-1 prospect. The second rig is currently drilling the Yatay-1 exploration well on the Guatiquia block, and we expect to have results from this well by year-end. We plan to move the third drilling rig from Corcel-E2 to the Amarillo well pad to drill a new exploration prospect, Cobea-1 or Amarillo-2. 

We plan to incorporate the Caruto-1 well results into our geological model and adjust our drilling order as required. Arion remains a firm drilling prospect that we would either side-track the existing well or re-drill it.

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

As disclosed in our third quarter update on November 2, 2010, our Yenac-2 well was cased as an oil well. Well logs indicated 48 feet of net potential pay in the well. We have just initiated the first of a four interval testing program in the Mirador formation and we expect to have results of the entire testing program by the end of December.

Our central Llanos rig is currently drilling Mantis-1 and we expect log results in December. Following this well, we plan to drill the Yenac-3 well before we recommence drilling our Mapache multi-well exploration program.

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

We drilled the Asarina-1 well on our Rio Ariari Block, the first well of a planned nine-well exploration program on the Block. The well encountered 79 feet of potential net pay from several Lower Mirador sands and was cased as a potential oil producer. An initial testing program targeting four separate sands commenced on October 30, 2010. The first Mirador test recovered 120 barrels of 10 degree API heavy oil at a maximum rate of 100 bopd with an eighty-five percent water-cut. The second Mirador test in a stratigraphically higher sand recovered 10 bopd of 10 degree API heavy oil at a ninety-eight percent water-cut. The final two tests from two separate Mirador sands recovered water with trace amounts of oil. We are encouraged by the presence of oil in our Asarina well. Based on our early success in the Llanos Basin heavy oil fairway we are considering alternatives including horizontal wells to evaluate the optimal completion, testing, and production techniques for our future heavy oil wells.

The next well in the Rio Ariari exploration program, Mochelo-1, began drilling operations on October 29, 2010 and reached total measured depth of 5,309 feet on November 18. Well logs indicate 69 feet of net potential pay in the Mirador formation. We cased the well and plan to perform a multi-interval testing program. The next well in the program, Borugo-1, will begin drilling in early-December.

The nine-well Rio Ariari exploration drilling program is designed to target new exploration prospects and play-types that could result in the identification of multiple large resource opportunities. We expect to run this program continuously for the remainder of 2010 and into 2011.

Production Update

Total Company production averaged 30,938 bopd to-date during the month of November before any additions from the Caruto-1 well. Production was consistent with October levels of 30,528 bopd as production additions from the Boa-2 well offset natural production declines.

Petrominerales Ltd. is a Latin America-based exploration and production company producing oil in Colombia with 17 exploration blocks covering a total of 2.1 million acres in the Llanos and Putumayo Basins and five exploration blocks in Peru covering a total of 9.4 million gross (5.2 million net) acres in the Ucayali and Titicaca Basins. Petrominerales is 65% owned by Petrobank Energy and Resources Ltd. (TSX:PBG).

Forward-Looking Statements

Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to the timing of capital projects and production results. The forward looking information is based on key expectations and assumptions made by Petrominerales, including assumptions concerning the success of future drilling activities, the performance of existing wells, prevailing commodity prices, availability of labour and services, receipt of required permits and regulatory approvals and performance of expected activities by industry partners. 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. A discussion of those risks and uncertainties can be found in the Company's 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
    Strategic Adviser and Chairman of the Board
    403.750.4400 or 011.571.629.2701 (FAX)
    Petrominerales Ltd.
    Corey C. Ruttan
    President and Chief Executive Officer
    403.750.4400 or 011.571.629.2701 (FAX)
    Petrominerales Ltd.
    Jack F. Scott
    Chief Operating Officer
    403.750.4400 or 011.571.629.2701 (FAX)
    Petrominerales Ltd.
    Kelly D. Sledz
    Chief Financial Officer
    403.750.4400 or 011.571.629.2701 (FAX)