CALGARY, ALBERTA--(Marketwire - Oct. 21, 2012) - Petrominerales (PMG.TO)(BVC:PMGC) is pleased to announce a light-oil discovery in two zones of our Sheshea-1X well in the Ucayali Basin of Peru. The Sheshea-1X exploration well is our second exploration well on Block 126 and was drilled to a measured vertical depth of 8,925 feet on September 9th. We conducted four tests in three different formations. In the Chonta formation, we produced an average of 1,430 barrels of oil per day ("bopd"), with no water recovered. In the Agua Caliente formation, we produced 80 bopd with a 97 percent water cut. The two tests conducted in the Copacabana formation recovered water. Our discovery demonstrates: (1) that our Peruvian acreage has attributes for successful oil exploration (2) that an active petroleum system and oil migration and trapping opportunities exist on the block; (3) the validity of our geological model and interpretations; and (4) that commercialization opportunities exist, as our light-oil discovery provides sales flexibility to maximize pricing and is located in proximity to river barge transportation.
Sheshea-1X Test Results
In the Chonta formation, we tested a ten foot perforated interval with an electric submersible pump ("ESP") for a total of 37.5 hours through temporary well-test equipment. A total of 2,235 barrels of 53 API gravity oil was produced at an average rate of 1,430 bopd, with no water recovered during the test. Solution gas was present, but in quantities too small to measure. Drawdowns at the end of the test were 50 percent. Additional drilling, testing and 3D seismic will be required to help evaluate this encouraging discovery.
The Chonta sand is currently interpreted as a shoreface sand with good lateral extent and continuity that was deposited on a pre-existing high. Internally calculated potential resource volumes suggest a potential of 14 million barrels of discovered petroleum initially-in-place ("DPIIP"), based on minimal closure, to 140 million barrels of DPIIP based on maximum closure to interpreted spill point.
Prior to the Chonta test, we completed two tests in the Copacabana formation that recovered water. A third test was conducted over an eight-foot interval in the upper Agua Caliente formation. The test was conducted with an ESP through temporary well test equipment. Only formation water was recovered in the first 20 hours. After that point, traces of oil were observed, growing gradually to a three percent cut of 42 API oil by the end of the 46.8 hour flow period. The total fluid rate was 2,703 barrels per day. Drawdowns at the end of the test were four percent.
The Agua Caliente results are encouraging. We believe we tested a transition zone in a down-dip position with a potential accumulation up-dip of the well. Based on our interpretation of 2D seismic data, we could gain up to 25 feet of additional elevation and potential net oil pay. Internal calculations suggest that up to 25 million barrels DPIIP is possible for the Aqua Caliente formation. Again, additional drilling, testing and 3D seismic will be required to evaluate this discovery.
Sheshea-1X Commercialization Plan
Our current plan is to incorporate these two encouraging test results into our geological and seismic mapping. We are planning a 3D seismic survey over the Sheshea structure to assist in the evaluation of the test results and to select possible appraisal drilling locations. Regulatory approval of the 3D seismic program is expected to take up to 18 months. Concurrently, we will initiate the regulatory process for possible commercialization. The timeline for potential commercialization is uncertain at this point and will depend on 3D seismic results, regulatory approval for possible commercialization, subsequent appraisal drilling, and technical evaluations.
Petrominerales Ltd. is an international oil and gas company operating in Latin America since 2002. Today, Petrominerales is one of the most active exploration companies and one of the largest oil producers in Colombia. Our high quality land base and multi-year inventory of exploration opportunities provides long-term growth potential for years to come.
Forward-Looking Statements and Cautionary Language. Certain information provided in this press release constitutes forward‐looking statements. Specifically, this press release contains forward‐looking statements relating to the Company's future exploration and development activities. The forward‐looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the availability of capital, the success of future drilling and development activities, the testing and performance of new wells, prevailing commodity prices and economic conditions, the availability of labour and services, the ability to transport and market our production, timing of completion of infrastructure and transportation projects, weather and access to drilling locations. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in our Canadian securities filings. Such factors include, but are not limited to: general economic, market and business conditions; fluctuations in oil prices; the test results and performance of exploration and development drilling, recompletions and related activities; timing and rig availability; availability of transportation and offloading capacity, outcome of exploration contract negotiations; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; risks associated with oil and gas operations; impact of weather on operations; and other factors, many of which are beyond the control of Petrominerales. There is no representation by Petrominerales that actual results achieved during the forecast period will be the same in whole or in part as those forecast; and there is no representation by Petrominerales that the test results of any new exploration well or development well is necessarily indicative of long-term performance or ultimate recovery. Except as may be required by applicable securities laws, Petrominerales assumes no obligation to publicly update or revise any forward‐looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
Undiscovered Petroleum Initially-In-Place ("UPIIP"). UPIIP, equivalent to undiscovered resources, are those quantities of petroleum that are estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of UPIIP is referred to as prospective resources, the remainder as unrecoverable. Undiscovered resources carry discovery risk. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. A recovery project cannot be defined for this volume of UPIIP at this time.
Discovered Petroleum Initially-In-Place ("DPIIP"). DPIIP, equivalent to "discovered resources", is that quantity of oil that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves, and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for these volumes of DPIIP at this time. There is no certainty that it will be commercially viable to produce any portion of the resources.