Quetzal Energy Ltd.
TSX VENTURE : QEI

Quetzal Energy Ltd.

May 09, 2011 08:57 ET

Quetzal Energy Puts Canaguay #1 Well on Production in Colombia

CALGARY, ALBERTA--(Marketwire - May 9, 2011) - Quetzal Energy Ltd. (TSX VENTURE:QEI) ("Quetzal" or the "Company") is pleased to provide the following update on operations:

Colombia Operations Update

Canaguaro

Quetzal has completed the installation of long term production facilities at the Canaguay #1 well location. Long term production testing of the well has commenced. During commissioning, the well has been produced at various rates. Most recently the Mirador Formation in the Canaguay #1 well was produced through the new facilities at a rate in excess of 2,000 barrels of oil per day with a .2% water cut. The optimal production rate for the Mirador reservoir and facilities will be determined by the results of the long term production test. Long term trucking and sale agreements have been signed for oil produced at Canaguay #1.

Quetzal has a 25% working interest and is acting as the operator of the Canaguaro block and the Canaguay #1 well.

Block 27

The Company has defined drilling locations on two separate structures, based on the interpretation of the previously completed 3D seismic survey. An additional follow-up development location has been selected on one of the structures dependant on success. Construction of the locations is scheduled to begin as soon as the required environmental permits are received. Drilling of the two wells is planned to commence in 3rd quarter of 2011. The wells have a planned depth of approximately 10,000 feet and will test prospective oil bearing intervals in the Carbonera, Mirador and Une Formations.

A follow-up 54 square kilometer 3D seismic acquisition program has commenced in the south eastern portion of the block to further define additional potential drilling locations. Completion of the 3D seismic acquisition is expected in the 2nd quarter. Drilling of an additional 10,000 foot well is planned for the second half of 2011, dependant on the results of the follow-up 3D seismic.

Quetzal has a 50% paying interest in the block and is acting as operator.

Block 21

Quetzal has completed 75% of an 83 square kilometer 3D seismic survey on Block 21. After processing and interpretation, the Company plans to drill 2 wells during the 4th quarter of 2011 or the 1st quarter of 2012.

Quetzal has a 50% paying interest in the block and is acting as operator.

Block 36

The acquisition of 109 square kilometers of 3D seismic on Block 36 is approximately 75% complete; this program has been delayed by weather and environmental difficulties. Drilling of one 15,000 foot well is scheduled to occur by the end of 2011.

Quetzal has a 20% paying interest in the block.

Guatemala Update

As part of Quetzal's ongoing strategy to maximize shareholder value, the Company continues to evaluate strategic alternatives. The Company is actively evaluating options including spinning out the Guatemalan assets into a separate company, selling the Guatemalan assets or soliciting third party joint venture partners to assist in developing the Guatemala blocks.

Reserves Update

Quetzal is pleased to announce a 43% increase in proved plus probable reserves as compared to last year's filing, to 3.269 million barrels. The Net Present Value before Income Tax (discounted 10%) of Quetzal's reserves has increased to USD$ 135,136,000; a 30% increase from the prior year as reported in Quetzal's independent reserves evaluations as of December 31 2011, for the Company's assets in Colombia and Guatemala.

The increases are largely attributable to operations in Colombia on the Canaguaro block, where proved plus probable reserves were .996 million barrels, with an NPV10 before income tax of USD$ 30,893,000.

The disclosure and reports relating to reserves data and other petroleum and natural gas information required pursuant to National Instrument 51-101 have been filed for the year ended December 31, 2010. A copy of Quetzal's forms 51-101 F1, 51-101 F2 and 51-101 F3 may be obtained from the Company's SEDAR profile at www.sedar.com.

About Quetzal Energy Ltd.

Quetzal is a junior oil and gas company with its primary assets in the Llanos Basin of Colombia; the Company also has oil and gas assets in Guatemala.

Cautionary Statements

This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws (together, "forward-looking information"). The use of any of the words "expect", "anticipate", "continue", "estimate", "believe", "plans", "intends", "confident", "may", "objective", "ongoing", "will", "should", "project", "should" and similar expressions are intended to identify forward-looking information. In particular, but without limiting the foregoing, this news release contains forward-looking information concerning the use of proceeds of the recently completed offering of units of the Corporation. .

The forward-looking information is based on certain key expectations and assumptions made by Quetzal, including expectations and assumptions concerning the operational results in Colombia and Guatemala. Although Quetzal believes that the expectations and assumptions on which the forward-looking information are based are reasonable, undue reliance should not be placed on the forward-looking information because Quetzal can give no assurance that they will prove to be correct.

Since forward-looking information addresses future events and conditions, by its very nature it involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the inherent risks involved in the exploration and development of oil and gas properties, the uncertainties involved in interpreting drilling results and other geological data, uncertainties relating to fluctuating oil and gas prices, the possibility of cost overruns or unanticipated costs and expenses and other factors including unforeseen delays. Anticipated exploration and development plans relating to Quetzal's properties are subject to change.

The foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information contained in this press release is made as of the date hereof and Quetzal undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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