Petrominerales Ltd.

Petrominerales Ltd.
Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

September 13, 2010 00:43 ET

Petrominerales Provides Operational Update Highlighted by Candelilla-4 Producing at 3,000 bopd

BOGOTÁ, COLOMBIA--(Marketwire - Sept. 13, 2010) - Petrominerales Ltd. ("Petrominerales") (TSX:PMG), a 66% owned subsidiary of Petrobank Energy and Resources Ltd. (TSX:PBG), is pleased to provide an operational update highlighted by our Candelilla-4 well producing at 3,000 barrels of oil per day ("bopd"). 

Guatiquia Block, Llanos Basin, Colombia

Our Candelilla-4 well is producing 19 degree API oil at a rate of 3,000 bopd from two separate Guadalupe intervals at less than one percent water-cut. The well began drilling operations on July 25, 2010 with the objective to produce by-passed Guadalupe pay encountered during the drilling of the first three Candelilla wells. We are currently moving the rig to the Corcel Block to drill the Boa-2 well which is expected to start drilling in mid-September.

On August 18, 2010, the electric submersible pump ("ESP") in the Candelilla-1 well failed, resulting in the well operating at a reduced rate without a pump for five days before being shut-in for seven days in August while we performed a work-over to replace the ESP. As a result, August production at Candelilla averaged 15,877 bopd. Prior to the ESP failure, the Candelilla-1 well was producing at over 9,000 bopd. Shortly after re-starting the well with the new pump, an electrical problem caused the ESP to fail. We have completed electrical repairs and placed the well back on production September 12th. We expect to ramp the ESP up to normal operating levels over the next few days.

Corcel Block, Llanos Basin, Colombia

In the Northeast area of Corcel, we commenced drilling our first exploration well, Amarillo-1, on June 10, 2010 and reached total measured depth of 13,457 feet on July 27. Well logs indicated a total of 46 feet of potential net oil pay in the Guadalupe formation. The Lower Sand 1 zone indicated an anomalous well log response and compelling hydrocarbon indications during drilling. Testing of two Lower Sand 1 intervals resulted in the recovery of salt water and a small volume of 6 degree API heavy oil. We completed two tests in the Guadalupe Sands resulting in the recovery of trace amounts of 31 degree API light oil. The Guadalupe test results are inconsistent with compelling well logs suggesting a problem with either the test design or indicating a well bore integrity issue that may require remedial action. To assist in our evaluation of the Guadalupe Sands in Amarillo-1 we have decided to core the equivalent Guadalupe Sands in Arion-1 since the Arion Guadalupe reservoir is up-dip from Amarillo and expected to be similar to that encountered in Amarillo. In addition, we plan to re-test the Guadalupe Sands and test an additional sand in the Guadalupe formation. 

Arion-1 began drilling operations on August 9, 2010. Initial drilling results are expected later in September.

During August, we completed the expansion of our water handling facilities and Corcel production averaged 8,400 bopd for the month of August, a 485 bopd increase over July. 

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

On our Mapache Block, we have completed testing the Manzanillo-1 exploration well. Six intervals were tested including, two Guadalupe intervals, a Carbonera C8 sand and three Carbonera C7 sands. Testing of the lowermost Guadalupe interval indicated the presence of a high deliverability sand that initially produced 34 degree API light oil at a rate of 1,409 bopd with a 75 percent water-cut. The final test rate declined to 5,688 barrels of fluid per day at a 95 percent water-cut, resulting in 270 bopd. We are currently evaluating the economic viability of this zone. The other tested intervals all recovered salt water. We have moved the drilling rig to Yenac and plan to drill as least two follow-up wells at our Yenac discovery before we recommence drilling our Mapache multi-well exploration program.

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

In July, we mobilized a drilling rig onto our Llanos Basin heavy oil acreage and commenced drilling operations August 3, 2010 on the Avellana-1 exploration well on our Chiguiro Oeste Block. The well reached measured depth of 4,908 feet on August 18, 2010. The Avellana well encountered the Mirador top 110 feet structurally higher than in the Chiguiro Oeste-1 well. We have completed testing of two of the three proposed intervals. Both intervals tested water however we reverse circulated out of the second interval and recovered heavy oil.

Following Avellana-1, we began drilling operations at Asarina-1 on September 8, 2010, on our Rio Ariari Block. We plan to conduct a multi-well exploration drilling program of up to nine wells on our Rio Ariari Block to follow-up on our Rio Ariari discovery targeting new exploration prospects and play-types. We expect to run this program continuously for the remainder of 2010 and into 2011.

Production Update

Total Company production averaged 31,909 bopd in August, lower than previous months largely due to the Candelilla-1 well being off-line and natural declines.

Executive Team Additions

We are pleased to announce the addition of Mr. Lorne Saina as Vice President Operations, effective September 28, 2010. Mr. Saina was Talisman's Operations Manager in Peru and most recently served as the Project Delivery Manager. Mr. Saina will be based in Bogotá and has over 30 years experience in the oil and gas industry in Peru, North Africa and Canada.

We are also to pleased to announce that Mr. Jeff Chant has joined Petrominerales as Vice President Organizational Performance. Mr. Chant is the Principal & Managing Director of the Arbinger Institute of Canada specializing in organizational performance.

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 66% owned by Petrobank Energy and Resources Ltd. (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 production results. 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
    Petrominerales Ltd.
    Corey C. Ruttan
    President and Chief Executive Officer
    403.750.4400 or 011.571.629.2701
    Petrominerales Ltd.
    Jack F. Scott
    Chief Operating Officer
    403.750.4400 or 011.571.629.2701
    Petrominerales Ltd.
    Kelly D. Sledz
    Chief Financial Officer
    403.750.4400 or 011.571.629.2701