Petrominerales Ltd.
TSX : PMG

Petrominerales Ltd.

February 27, 2011 22:37 ET

Petrominerales Proved Plus Probable Reserves Additions Replace 153% of 2010 Production

CALGARY, ALBERTA--(Marketwire - Feb. 27, 2011) - Petrominerales Ltd. ("Petrominerales" or the "Company") (TSX:PMG) is pleased to report proved plus probable reserves of over 60 million barrels of oil as at December 31, 2010 (as determined by our independent reserves evaluators DeGolyer and MacNaughton ("D&M")), replacing 2010 production by 153%.

HIGHLIGHTS

  • 2010 production averaged 37,027 barrels of oil per day ("bopd"), a 66 percent increase over 2009.
  • Proved developed producing reserve additions replaced production by 163 percent, total proved reserve additions replaced production by 159 percent and proved plus probable reserve additions replaced 153 percent of production.
  • Proved developed producing reserves increased 46 percent to 27.1 million barrels, total proved reserves increased 22 percent to 44.0 million barrels of oil and proved plus probable reserves increased by 13 percent to 60.2 million barrels of oil.
  • Total proved plus probable NPV 10 (before tax) is US$2.5 billion.
  • Based on unaudited capital expenditures of US$506.4 million, total proved and proved plus probable finding and development costs ("F&D") are $30.73 per barrel and $32.60 per barrel in 2010, respectively, including changes in future development costs. These F&D costs include $78.9 million (2009 - $53 million) of exploration costs incurred on exploration acreage not evaluated by D&M (Heavy Oil acreage, Peru and other 3D seismic costs). Factoring out the exploration costs on property not evaluated by D&M, the 2010 F&D costs for total proved reserves would have been $27.06 per barrel and $28.78 per barrel for total proved plus probable reserves.

D&M completed an evaluation effective as at December 31, 2010 of the Company's Orito and Neiva properties and portions of four of the Company's 15 exploration blocks, Corcel, Guatiquia, Castor and Casimena. 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 Producing   Total Proved   Proved Plus Probable  
             
December 31, 2009 Reserves 18,533   35,987   53,107  
2010 Production (13,517 ) (13,517 ) (13,517 )
Net Additions 22,059   21,516   20,632  
December 31, 2010 Reserves 27,075   43,986   60,222  
Year over year increase in reserves 46 % 22 % 13 %
Production replacement 163 % 159 % 153 %

Net Present Value of Future Net Revenue Before Tax (US$ Millions)(1)
 
  0 % 8 % 10 %
Proved Developed Producing 1,471   1,248   1,204  
Total Proved 2,411   1,940   1,849  
Proved Plus Probable 3,344   2,650   2,517  
  1. Using forecast prices and costs.
Net Present Value of Future Net Revenue After Tax (US$ Millions)(1)  
  0 % 8 % 10 %
Proved Developed Producing 1,167   987   951  
Total Proved 1,839   1,475   1,405  
Proved Plus Probable 2,481   1,962   1,861  
  1. Using forecast prices and costs.

RESERVES INFORMATION BY AREA

  Deep Llanos   Orito   Neiva   Central Llanos   Total  
Proved Developed 17,140   2,379   5,504   2,052   27,075  
Proved Undeveloped 4,476   7,052   2,926   2,457   16,911  
Total Proved 21,616   9,431   8,430   4,509   43,986  
  Probable Undeveloped 6,845   4,570   1,536   3,285   16,236  
Proved Plus Probable 28,461   14,001   9,966   7,794   60,222  

The proved undeveloped reserves include the following:

  • Two wells in the Deep Llanos (Candelilla-5 and Yatay-2);
  • Two wells in the Central Llanos (Yenac-3 and Capybara-2);
  • 26 wells at Neiva; and
  • 21 wells at Orito.

The probable undeveloped reserves include the following:

  • One well in the Deep Llanos (Corcel-A3 side-track);
  • Three wells in the Central Llanos (Yenac-4, Yenac-5 and Yenac-6);
  • 9 wells at Neiva; and
  • 6 wells at Orito.
Future Net Revenue, Undiscounted, Forecast Prices and Costs (US$ Millions)  
  Revenue   Royalty   Operating Costs   Development Costs   Future Net Revenue Before Taxes   Income Taxes   Future Net Revenue After Taxes  
Total Proved 3,649   433   446   359   2,411   572   1,839  
Proved Plus Probable 5,011   629   577   461   3,344   863   2,481  

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

  WTI  
  @CUSHING  
YEAR $US/BBL  
2011 88.00  
2012 90.78  
2013 93.64  
2014 96.57  
2015 99.58  
Thereafter +2% per year  

Finding and Development Costs(1)

Petrominerales' all-in 2010 F&D costs of $30.73 per barrel for total proved reserves and $32.60 per barrel for total proved plus probable reserves include $78.9 million (2009 - $53 million) of exploration costs incurred on exploration acreage not evaluated by D&M (Heavy Oil acreage, Peru and other 3D seismic). Factoring out the exploration costs on property not evaluated by D&M, the 2010 F&D costs for total proved reserves would have been $27.06 per barrel and $28.78 per barrel for total proved plus probable reserves.

    2010   2009   Three-Year Average  
               
Capital expenditures (US$ Millions) 506           281   1,055  
             
Change in future costs to develop (US$ Millions)            
  Total Proved 155   70          171  
  Proved plus probable 167   60   78  
Total costs (US$ Millions)            
  Total Proved              661   351   1,226  
  Proved plus probable              673           341   1,133  
Net reserve additions (MBBL)            
  Total Proved 21,516   18,975          49,083  
  Proved plus probable 20,632   24,420          48,938  
F&D costs (US$ per BBL)            
  Total Proved                  30.73               18.51           24.98  
  Proved plus probable                  32.60               13.98           23.14  
  1. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year.
  2. The total undiscounted future development costs included in the December 31, 2010 D&M report was $359 million (2009 - $204 million) for total proved reserves and $461 million (2009 - $295 million) for proved plus probable reserves.

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 www.sedar.com in mid- March. Estimated values of future net revenue disclosed in this press release do not represent fair market values.

INVESTOR CONFERENCE CALL

Management of Petrominerales will be holding a conference call for investors, financial analysts, media and any interested persons on Thursday, March 3, 2011 9:00 a.m. (Mountain time) (11:00 a.m. Eastern Time) to discuss our 2010 year-end financial and operating results. We expect to issue our fourth quarter and year-end financial results along with an operational update in advance of the call. The investor conference call details are as follows:

Live call dial-in numbers: 416-340-8527 / 877-240-9772
Replay dial-in numbers: 905-694-9451 / 800-408-3053
Replay pass code: 8167532

The live audio webcast link is: http://events.digitalmedia.telus.com/petrominerales/030311/index.php.

About Petrominerales

Petrominerales is a Latin America-based exploration and production company producing oil in Colombia with 15 exploration blocks covering a total of 2.0 million acres in the Llanos and Putumayo Basins and five exploration blocks in Peru covering a total of 9.5 million gross (5.4 million net) acres in the Ucayali and Titicaca Basins.

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 Company's future exploration and development activities, future transportation capacity in the Llanos basin, future production estimates, timing for bringing wells on production and the Company's reserves. 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 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 transport and market our production, timing of completion of infrastructure and transportation projects, weather and access to drilling locations. 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; availability of transportation, 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.
    Corey C. Ruttan
    President and Chief Executive Officer
    403.750.4400 or 011.571.629.2701
    or
    Petrominerales Ltd.
    Jack F. Scott
    Chief Operating Officer
    403.750.4400 or 011.571.629.2701
    or
    Petrominerales Ltd.
    Kelly D. Sledz
    Chief Financial Officer
    403.750.4400 or 011.571.629.2701
    or
    Petrominerales Ltd.
    John D. Wright
    Chairman and Strategic Advisor
    403.750.4400 or 011.571.629.2701
    ir@petrominerales.com
    www.petrominerales.com