Suroco Energy Inc.
TSX VENTURE : SRN

Suroco Energy Inc.

February 13, 2012 07:00 ET

Suroco Energy Inc. Announces Commencement of Lapa-1 Drilling in Llanos Basin and Updates Operational Activities in Colombia

CALGARY, ALBERTA--(Marketwire - Feb. 13, 2012) -

(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)

Suroco Energy Inc. (TSX VENTURE:SRN) ("Suroco" or the "Corporation") is pleased to announce that the Lapa-1 exploration well in the Llanos Basin has commenced drilling.

Lapa-1 Exploration Well, San Antonio Block

The Lapa-1 exploration well in the San Antonio Block in Colombia commenced drilling on February 9, 2012 and is expected to take approximately 24 days to reach a planned total depth of approximately 2,490 meters. The Lapa-1 exploration well is the second well to be drilled in the San Antonio Block and is located on a structural closure defined on 3D seismic. The well has multiple reservoir targets including the Carbonera, Mirador, and Une Formations. The Corporation holds a 28% economic interest in the San Antonio Block.

Operational Update

Production from the Suroriente Block in the Putumayo Basin, where the Corporation holds a 15.8% working interest, has averaged 6,529 barrels of oil per day (951 barrels of oil per day net after royalty) since the Cohembi-2 workover was completed on February 3, 2012. The Cohembi-2 well was down for a total of 21 days, whilst remedial work was completed.

Production from the Suroriente Block is currently shipped through two pipeline systems, one to the Pacific port of Tumaco and the other to the Caribbean port of Covenas. A new oil sales agreement with Ecopetrol became effective on December 1, 2011. Since that time three cargoes were sold in December and January. The received price from these oil sales has varied between US$99 to US$105/bbl.

Average production from the Suroriente Block for the fourth quarter of 2011 was 5,754 barrels per day (838 barrels per day net to the Corporation after royalty). During December 2011 operations in the Suroriente block were temporarily suspended due to civil demonstrations and illegal road transport blockages which resulted in approximately 11 days of lost production.

Drilling operations at the Cohembi oilfield in the Suroriente Block, where the Corporation expects to drill approximately seven wells during 2012, are expected to resume in the near future after civil works to the existing Cohembi-3 well pad are completed to allow multiple deviated wells to be drilled from this surface pad. The next appraisal well, Cohembi-5, is planned to test the reservoir extent approximately 1 kilometer to the southwest of the existing producing area. In addition, two new multi-well pads will be constructed in order to enable the subsequent appraisal wells to evaluate the possible extension of the oilfield both to the northwest and further to the south of the existing producing area.

The Cohembi oilfield development study, which was awarded to DeGolyer & MacNaughton in mid 2011 will be completed during February 2012. The sub-surface model and reservoir simulation results support and confirm the objective of extending the appraisal drilling to the south of the existing producing area and has provided the conceptual basis for a waterflood development to maximize recovery in the Cohembi oilfield.

Further details explaining the Corporation's activities and 2012 drilling program are contained in a presentation on the Corporation's website at www.suroco.com

The Corporation is a Calgary-based junior oil and gas company, which explores for, develops, produces and sells crude oil, natural gas liquids and natural gas in Colombia. The Corporation's common shares trade on the TSX Venture Exchange under the symbol SRN.

Forward-Looking Statements

This press release contains forward-looking statements relating to the operational and exploration activities for Suroco, the evaluation of certain prospects in which the Corporation holds an interest, estimated number of drilling locations, expected capital program (including its allocation), production growth, and other statements that are not historical facts. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, estimates, forecasts, projections and other forward-looking statements will not occur, which may cause actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These assumptions, risks and uncertainties include, among other things, the state of the economy in general and capital markets in particular; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; changes in environmental and other regulations; risks associated with oil and gas operations and future exploration activities; the need to obtain required approvals from regulatory authorities; product supply and demand; market competition; political and economic conditions in the country in which the Corporation operates; the risk that the conversion of the Corporation's 28% economic interest in the San Antonio Block into a full 28% undivided working interest in the San Antonio Block will not occur if the necessary approvals are not obtained; and other factors, many of which are beyond the control of the Corporation. You can find an additional discussion of those assumptions, risks and uncertainties in Suroco's Canadian securities filings.

Readers should also note that even if the 2012 drilling program as proposed by Suroco is successful, there are many factors that could result in production levels being less than anticipated or targeted, including without limitation, greater than anticipated declines in existing production due to poor reservoir performance, mechanical failures or inability to access production facilities, among other factors

The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by law, Suroco disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, Suroco undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Suroco Energy Inc.
    Alastair Hill
    President and Chief Executive Officer
    (403) 232-6784
    (403) 232-6747 (FAX)

    Suroco Energy Inc.
    Travis Doupe
    VP Finance and Chief Financial Officer
    (403) 232-6784
    (403) 232-6747 (FAX)
    www.suroco.com