Petrominerales Ltd.

Petrominerales Ltd.

December 17, 2007 03:58 ET

Petrominerales Ramps Up 2008 Activity Levels

BOGOTA, COLOMBIA--(Marketwire - Dec. 17, 2007) - Petrominerales Ltd. ("Petrominerales" or the "Company") (TSX:PMG), a 76.5% owned subsidiary of Petrobank Energy and Resources Ltd. ("Petrobank") (TSX:PBG)(OSLO:PBG), is pleased to announce that we are planning the Company's largest annual capital program in 2008. We expect to be one of the most active explorers in Colombia in 2008 and are also planning an extensive development drilling program. Our 2008 plan builds on our 2007 successes and will provide the platform for continued growth in the coming years.

In 2008, Petrominerales plans to drill seven additional wells at Corcel, 10 wells at Orito and a further seven exploration wells focused primarily in the Llanos Basin. This will make Petrominerales one of the most active explorers in Colombia in 2008. In addition, we have defined a 30 well development-drilling program at our Neiva field, which may require the importation of a specialized drilling system to efficiently implement the project.

Corcel Block

With the success of the Corcel-1 and 2 exploration wells in 2007 we are planning for a significant Corcel capital program in 2008. Our Corcel-3 well is currently drilling and is at a depth of approximately 10,865 feet. After drilling Corcel-3 we expect to temporarily relocate the drilling rig to drill two of our Llanos Basin dry-season-only exploration wells, after which we plan to resume our Corcel drilling program starting with the Corcel-C exploration well. We then expect to continue drilling additional Corcel exploration and delineation wells through to the end of 2008.

Corcel production is currently being processed through temporary facilities and trucked. In the second half of 2008 we expect to have all the permits in place required to commence construction on permanent production facilities and an oil pipeline. The permanent production facilities will incorporate a three-train modular design with an initial fluid handling capacity of 180,000 barrels of fluid per day. The production facility will be designed to incorporate additional fluid processing trains as required. We expect the Corcel pools to exhibit the same production characteristics of most Llanos Basin fields, with increasing watercut over time and high ultimate recoveries of original oil in place. The 80 kilometer, 10 inch pipeline from Corcel to the Llanos Basin's main pipeline off-take point at Porvenir will have a capacity of approximately 40,000 bopd. Starting in September 2008, we expect to have access to up to 30,000 bopd of offloading capacity at Monterrey, 77 kilometers from Corcel, which should be sufficient for our requirements before the pipeline is completed.

Our existing inventory of Corcel drilling locations has been defined from our 47 square kilometer 3D seismic survey, which covers approximately 15 percent of the 79,815-acre Block. A 2008 3D seismic program is planned for our 26,341-acre Guatiquia Block, which adjoins the Corcel Block to the south. At that time we also plan to further expand the 3D seismic coverage over our Corcel Block by shooting an additional 100 square kilometers of 3D seismic covering an additional 32 percent of the block.


Petrominerales plans to drill 10 Orito wells in 2008. This program will be focused in updip areas of the field where we had success in 2007 and in the southwest extension area near the highly successful Orito-117 and 118 wells. In addition, we will be initiating a secondary recovery project in the Pepino formation with a water injection program. Lastly, following the success of the Conga-1 well in the Villeta formation on the adjacent Las Aguilas block, we are redesigning our drilling and completion program to more fully delineate the potential of this formation on the Orito block. In addition to our ongoing development drilling program, a 48 square kilometer 3D seismic program is planned for Orito in 2008 which will help delineate the southern extension and eastern flanks of the main Orito field. This is expected to add further to our large inventory of development drilling locations.

Las Aguilas Block

The Conga-1 well was drilled to a total depth of 7,963 feet and was initially perforated and fracture stimulated in the Caballos formation. The Caballos sands tested non-commercial quantities of hydrocarbons on a stand-alone basis, and were temporarily isolated. We then perforated and acidized an initial 16 feet of pay in the lower Villeta formation. The well naturally flowed a total of 725 barrels of 31 degree API oil over a 34-hour period. We have now completed a second acid stimulation and placed the well on an extended production test using a jet pump assembly capable of handling production of up to 1,000 barrels per day.

Exploration Program

Petrominerales drilled five exploration wells in our 2007 exploration program. Four of these wells were drilled in the Llanos Basin, two of which were completed as new pool discoveries (Joropo and Corcel). The Conga-1 well drilled in the Putumayo Basin adjacent to Orito was also a success. Petrominerales holds over 1.5 million acres of land in Colombia, on which we have acquired 357 square kilometers of 3D seismic and reprocessed all available 2D seismic data. Currently we have an additional 18 leads and prospects on these lands. In 2008, we plan to drill eight exploration wells: two at Mapache and one at each of Joropo, Casanare Este, Castor, Casimena, Corcel, and Las Aguilas. We also plan to shoot seismic over nine of our 13 exploration blocks in 2008, including large programs on our three heavy oil blocks. These programs are intended to be the foundation for expanded exploration drilling programs beyond 2008, including our longer-term growth plan for heavy oil in the Llanos Basin.

Heavy Oil

Petrominerales has three large blocks in the southern Llanos Basin heavy oil belt, Chiguiro Oeste, Chiguiro Este and Rio Ariari. Our heavy oil blocks offset the Cano Sur Block, which is being developed by a recently announced partnership between Shell and Ecopetrol, reflecting the increasing interest in the heavy oil potential of this area.

In 2008, we plan to shoot 576 kilometres of reconnaissance 2D seismic on our Chiguiro Oeste and Rio Ariari Blocks and a combination of 2D and 3D seismic over our Chiguiro Este Block where we are targeting large heavy oil accumulations.

In addition, Petrominerales intends to participate in the upcoming Heavy Oil Bid Round, expected to be announced early next year. Petrobank's proprietary THAI™ technology, which Petrominerales has licensed, represents a paradigm shift in heavy oil recovery technology. THAI™ is well suited to the Colombian heavy oil environment and should give us a competitive advantage to efficiently develop Colombian heavy oil opportunities in an environmentally and socially responsible fashion.

Petrominerales Ltd.

Petrominerales Ltd. is a Latin American-based exploration and production company producing oil from three blocks in Colombia and has contracts on 13 exploration blocks covering a total of 1.5 million acres in the Llanos and Putumayo Basins. Petrominerales is 76.5 percent owned by Petrobank (TSX:PBG)(OSLO: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
    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
    011 571 629 4723 (FAX)