RENO, NV--(Marketwired - Oct 2, 2013) - Ram Power, Corp. (TSX: RPG)
- REMEDIATION DRILLING SUCCESS;
- RATIONALIZATION OF NON CORE ASSETS; AND
- CONTINUED REDUCTION IN OVERHEAD COSTS
Ram Power, Corp. (TSX: RPG) ("Ram Power" or the "Company"), a renewable energy company focused on the development, production and sale of electricity from geothermal energy, is pleased to announce today the following project and corporate updates.
SAN JACINTO-TIZATE REMEDIATION DRILLING PROGRAM
The Company is currently conducting a remediation drilling program to increase the steam resource of the San Jacinto-Tizate project (the "Project"). The remediation drilling program calls for the refurbishment of four existing production wells as well as the replacement and perforation of specified well casings along with the deepening and forking of two wells. The remediation drilling operations are being led by Sinclair Knight Merz, the resource consultant for the Company, in consultation with PENSA and Thermasource Inc. (the "Remediation Team").
Well SJ 6-1
In August 2013, the Remediation Team successfully replaced 367 meters of damaged liner and perforated a 60 meter section of liner which had demonstrated increased temperature and permeability. SJ 6-1 steamflow is currently estimated at 9.8 tonnes / hour or 1.3 MW (gross) and the well was connected to the plant on September 26, 2013.
Well SJ 6-2
In September 2013, the Remediation Team successfully perforated 60 meters of blank liner to recover production at an upper major zone that may have been affected by prior mineral deposition. After a brief recovery period, well SJ 6-2 was placed back in service and steam-flow is currently estimated at 58 tonnes / hour per hour or 8 MW (gross).
Well SJ 9-3
The remediation program for well SJ 9-3 began on August 25, 2013 and was remediated in three phases:
- Initial work resulted in the Company successfully retrieving the K10 survey tool and 1,600 meters of wire line which were left in the well bore following a mechanical problem during the 2011 drilling campaign;
- Secondly, the Company successfully deepened the initial leg of the well from 1,682 meters to 1,980 meters and perforating approximately 78 meters of blank liner; and
- Finally, the Company successfully drilled a fork leg to a total depth of 1,900 meters during which the drilling operation experienced a total loss of circulation at 1,200 meters and 70 to 80% circulation losses for the remainder of the drilling. Such losses of circulation provide a strong indication of high permeability.
The Company expects the well SJ 9-3 remediation program to be completed prior to the third week of October at which time the well will be shut-in and, following a 2-3 week heat up period, will be placed back in service in late November.
Well SJ 12-3
In preparation for the remediation work, well SJ 12-3 will be removed from production on October 8, 2013, which will result in a temporary loss of power production of approximately 36 tonnes / hour or 4.7 MW gross. The remediation program for well SJ 12-3 includes the perforation, deepening and forking of the well which is expected to commence on October 13th and last approximately 30 days. Following the remediation activities and heat up period, it is anticipated that well SJ 12-3 will be tested and placed back in service in late November 2013.
Following the completion of the resource remediation drilling program on or before December 15, 2013, the Company will conduct a plant capacity test to be concluded no later than January 22, 2014. The test includes a 30-day stabilization period of the resource field followed by a 7-day performance test to determine the net operating output of the plant.
The overall remediation drilling program has a targeted increase in steam availability of approximately 9 to 14 MW, or 70-110 tonnes / hour of additional net capacity bringing total generation to approximately 59 to 63 MW (net). At that level, utilizing current power purchase agreement, the Company's annualized net revenue will be approximately $56-61 million.
"I am extremely pleased with the results of the remediation drilling program to date," stated Tony Mitchell, Executive Chairman of Ram Power, Corp. "We continue to further the development of this resource, bringing additional capacity online in our continued effort to deliver long term value for our shareholders and power to the people of Nicaragua. This is truly a world class geothermal resource."
Back Pressure Unit Sale
As required under the San Jacinto power purchase agreement, the Company decommissioned its 2 x 5 MW (net) existing backpressure steam turbo generators and associated equipment ("Back Pressure Equipment"). The Company has agreed to sell the Back Pressure Equipment to a third party buyer and expects to close the sale in the first week of October 2013. All cash proceeds, net of expenses, associated with the sale of the Back Pressure Equipment will fund the Major Maintenance Reserve Account for use in the remediation drilling program.
As previously disclosed, the Company funded $4.8 million to a reserve account to satisfy certain San Jacinto power purchase agreement obligations which were not met by the off-taker. The off-taker, along with the Government of Nicaragua, came to an agreement on the funding of the guarantees, and as a result, the $4.8 million will be released from the reserve account. The funds will either be used to fund the Major Maintenance Reserve Account for use in the remediation drilling program or be eligible for distribution to the Company under the Project distribution conditions.
GEYSERS AND OTHER NON-CORE GEOTHERMAL PROJECTS
As previously disclosed, the Company, in conjunction with its advisor Raymond James Ltd., continues to engage in dialogue with interested parties in an effort to monetize the Geysers Project. Further, the Company is in the process of selling and/ or disposing of all of its non-core assets so that it might focus its efforts on maximizing the cash flow and profitability of the Company's producing assets in Nicaragua.
The Company's Vice President and Chief Operating Officer of Latin America, Tono Rodriguez, will be relocating to North America for the next two fiscal quarters where he will be assisting the Company in the rationalizing of the North American assets, including the selling of the Geysers Project, and the continuing reduction of the Company's overhead.
REDUCTION IN OVERHEAD COSTS
Continuing with the Company's cost reduction efforts in 2013, the sale and/ or disposition of non-core assets will result in onetime cost savings of approximately $300,000 in 2013 and recurring savings of approximately $500,000 per year going forward.
Additional overhead reductions and/ or cost savings will be realized through the reduction of professional fees and the relocation of the Company's office in the Reno, Nevada to 401 Ryland St., Reno, NV, 89502, which move will occur on November 1, 2013.
About Ram Power, Corp.
Ram Power is a renewable energy company engaged in the business of operating and developing geothermal properties and has interests in geothermal projects in Nicaragua and the United States.
This press release contains "forward-looking information" within the meaning of applicable securities laws including information regarding the business of Ram Power. Readers are cautioned not to place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by this information. The statements in this press release are made as of the date of this release. Ram Power undertakes no obligation to update forward-looking information, other than as required by law, or comment on analyses, expectations or statements made by third parties in respect of Ram Power, or its financial or operating results or its securities.