Suroco Energy Inc.
TSX VENTURE : SRN

Suroco Energy Inc.

March 08, 2012 16:00 ET

Suroco Energy Inc. Announces Results of Lapa-1 Drilling and Provides Operational Update on Suroriente Block

CALGARY, ALBERTA--(Marketwire - March 8, 2012) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA

Suroco Energy Inc. (TSX VENTURE:SRN) ("Suroco" or the "Corporation") announces the following operational updates on its activities in Colombia.

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 reached total depth of 2,493 meters on February 23, 2012. The well encountered minor oil and gas shows in the well-developed Mirador, Gacheta and Une Formations. Log evaluation and side wall cores subsequently confirmed that these zones do not contain moveable hydrocarbons and the well has been abandoned. The net well cost to the Corporation, for its 28% economic interest in the Lapa-1 well, was limited to US$0.5 million pursuant a turnkey agreement between the Corporation and its partners in the San Antonio Block. The gross cost of the well is anticipated to be approximately US$6.2 million including civil works and lease construction.

Operational Update, Suroriente Block

Production from the Suroriente Block in the Putumayo Basin, where the Corporation holds a 15.8% working interest, averaged 6,354 barrels of oil per day (926 barrels of oil per day net to the Corporation after royalty) during the month of February. Received pricing from recent oil sales has varied between US$99 to US$105 per barrel.

Cohembi Oilfield Drilling Preparations: Civil work and surface pad preparations are now largely completed and drilling operations at the Cohembi-5 well are anticipated to commence in mid March. This will be the first of approximately six appraisal/stepout wells to be drilled in the Cohembi oilfield during 2012. The Cohembi-4 multi-well surface pad is progressing in order for it to receive the drilling rig immediately after the Cohembi-5 well is drilled and completed. The objectives of the Cohembi drilling program were previously explained in the Corporation's press release of February 24, 2012 which also announced the year-end reserves information.

Curiquinga-1 Well On Production: Following a workover and installation of a hydraulic rod pump unit, the Curiquinga-1 well was placed on production on February 25, 2012. The well, which previously produced from the Villeta T reservoir, has been converted to a Villeta U producer. On test production the well has been producing at approximately 50 barrels per day of 15 degree API oil (approximately 8 barrels of oil per day net to the Corporation after royalty). The oil gravity in this particular well is more economically suited to a rod pump production method.

Quillacinga Field Water Handling Facility: Construction work is underway to install a water injection facility at the Quillacinga oilfield. Under new Colombian regulations, the produced water is required to be disposed of by sub-surface injection. The Corporation expects to be able to handle all the produced water by injection into the non-producing Quillacinga-1 wellbore, which has obviated the requirement to drill a dedicated water injection well. In the future it is conceivable that this produced water may be injected into the nearby Cohembi oilfield to assist in pressure maintenance of that 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, among others, the operational and exploration activities for Suroco, the evaluation of certain prospects in which the Corporation holds an interest, the estimated gross costs of the Lapa-1 exploration well in the San Antonio Block, estimated number of drilling locations, expected timing of commencement of drilling, expected capital program (including its allocation), the ability to dispose of produced water, 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