RENO, NV--(Marketwired - Dec 19, 2013) - 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. Well 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 9.5 MW (net).
Well SJ 9-3
The remediation program for well SJ 9-3 began on August 25, 2013 and was successfully remediated in three phases. During the heat-up period and discharge test of well SJ 9-3, the Company conducted a sinker bar survey run on November 24, 2013, and discovered an obstruction at approximately 1,100 meters in the main leg of the well. Following the discovery of the obstruction, the Company initiated a series of well air capping cycles by alternating well head pressures in an attempt to remove the blockage naturally and to stimulate well SJ 9-3 flow. On December 6, 2013, the Company conducted a down hole camera survey which reconfirmed the blockage at approximately 1,100 meters. As a result, following the completion of well SJ 12-3, the Company will mobilize the ThermaSource drilling rig back to well SJ 9-3 to clear the main leg obstruction.
The clearing of the blockage is expected to take approximately 10 days, at which time the well will be put back into thermal recovery. The Company remains encouraged with the initial results of well SJ 9-3, including, but not limited to, the drilling loss circulation during remediation, down hole temperature and the results of the injectivity test.
Well SJ 12-3
In preparation for the remediation work, well SJ 12-3 was removed from production on October 8, 2013. The Company successfully perforated the liner as well as deepened, and forked, well SJ 12-3 to approximately 2,400 meters. Following the remediation efforts, the Company was unsuccessful at retrieving the whipstock used to directionally drill the forked leg. A down hole camera was used to view the whipstock, and from the initial images it was evident that the casing joint holding the whipstock was not stable, preventing the whipstock retrieving tool from engaging the keyway pocket to extract the whipstock from the well bore.
Once the Company is able to retrieve the whipstock, the Company will continue with normal operations and drill out the isolation plug and retrieve the inflatable packer. The Company expects the process to finalize in the near future, at which time the well will be shut in for thermal recovery.
Remediation Testing Date
The Company and the Lenders are in negotiations to amend the remediation completion date in the Common Terms Agreement, with such revised date to start in mid-January 2014. Following the completion of the resource remediation drilling program, the Company will conduct a plant capacity test expected to be concluded in mid-February 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.
Remediation Summary to Date
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 the current power purchase agreement, the Company's expected annualized net revenue will be approximately $56-61 million annually.
GENERAL CORPORATE UPDATE
The Company, in its efforts to monetize the Geysers Project, has received several bids from interested parties looking to acquire the asset. The Company will be evaluating those bids in the next few weeks with an expectation to enter into a purchase and sale agreement early in 2014. Any monies received will be used for further development of our pipeline projects and general corporate purposes.
The Company is currently in the process of conducting a Rights Offering, which entitles each holder of each Common Share as of the November 26, 2013 record dates to receive one transferable right (a "Right") for each Common Share held. Every 4.5 Rights will entitle a holder to purchase one Common Share at a price of $0.08. A maximum of 67,084,960 Common Shares will be issued pursuant to the Rights Offering which is being backstopped by Dundee Securities Ltd., Newberry Holdings International Ltd. ("Newberry") and Exploration Capital Partners 2000 Limited Partnership ("Explo Cap"). Pursuant to the standby agreements with such parties, Dundee Securities, Newberry and Explo Cap have agreed to purchase from Ram Power, subject to certain conditions, such number of Common Shares that are available to be purchased, but not otherwise subscribed for under the Rights Offering, which will result in 100% of the Common Shares being issued under the Rights Offering. The expiry of the rights occurs at 5:00 p.m. EST on December 23, 2013 and will raise gross proceeds of approximately Cdn.$5.3 million.
Exploration of Strategic Alternatives
As previously disclosed, Ram Power formed a Mergers and Acquisitions Committee to explore and evaluate a broad range of strategic alternatives for the Company to enhance shareholder value. Dundee Securities Ltd. has been appointed as financial advisor on the strategic alternatives review process, and will examine a range of strategic alternatives which may include the acquisition or disposition of assets, joint ventures, the sale of the Company, alternative operating models including maximizing operational efficiencies, or continuing with the current business plan, among other potential alternatives.
"The Company continues to do all that is necessary to conclude a successful remediation program in order to maximize shareholder value," stated Antony Mitchell, Executive Chairman for Ram Power Corp. "We are looking forward to 2014, and are confident it will demonstrate increased production at San Jacinto, the sale of our Geysers Project and a rationalization of a strategic alternative for the Company."
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.