Update - nice
I wonder if a pump would boost rates in Trinidad?
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New discovery at Supremo. Boosting CPF from 10K bfpd to 25K bfpd - like that...
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PXT coming out of the gate strong...
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PAREX RESOURCES ANNOUNCES 2010 YEAR-END COLOMBIA OIL RESERVES AND TESTS OIL IN TRINIDAD
Parex Resources Inc. has released the results ofits 2010 year-end oil reserves evaluation and has provided an operationsupdate on the company's current activities.
Highlights include:
- Independent reserve evaluation for Colombian Kona discovery;
- Proved plus probable reserves of 5.85 million barrels of oil (net company working interest);
- Kona-1 production rates of up to 2,900 barrels of oil per day ("bopd") gross on natural flow(1,450 bopd net company working interest);
- Trinidad Snowcap-1 average production test rates of 580 bopd and 5.4 million standard cubicfeet per day ("mmscfd") gross (290 bopd and 2.7 mmscfd net company working interest) on natural flow.
2010 Year-end Reserves
Thefollowing tables summarize information contained in the independentreserves report prepared by GLJ Petroleum Consultants Ltd. ("GLJ")effective December 31, 2010 ("GLJ Report"). The GLJ Report was preparedin accordance with definitions, standards and procedures contained inthe Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") andNational Instrument 51-101, Standards of Disclosure for Oil and GasActivities ("NI 51-101"). Additional reserve information as requiredunder NI 51-101 will be included in the Company's Annual InformationForm which will be filed on SEDAR by April 30, 2011. As this is theCompany's first reserve evaluation no comparative amounts are provided.
Therecovery and reserve estimates of crude oil reserves provided in thisnews release are estimates only, and there is no guarantee that theestimated reserves will be recovered. Actual crude oil reserves mayeventually prove to be greater than, or less than, the estimatesprovided herein. All reserves presented are based on GLJ's forecastpricing effective December 31, 2010. Consistent with the Company'sreporting currency, all amounts are in United States dollars unlessotherwise noted.
2010 Year-end Reserves VolumesCompany Working Interest (6)Reserves at Dec. 31, 2010Reserves Category (1) (mbbl) (2)----------------------------------------------------------------------------Proved (3) 1,066Proved plus probable (4) 5,854Proved plus probable plus possible (5) 10,439(1) Reserves are 100% light crude oil, therefore disclosure of heavy crudeoil, liquids and natural gas volumes has not been provided. Reservesare before royalties.(2) mbbl is defined as thousand barrels of oil.(3) "Proved" reserves are those reserves that can be estimated with a highdegree of certainty to be recoverable. It is likely that the actualremaining quantities recovered will exceed the estimated provedreserves.(4) "Probable" reserves are those additional reserves that are less certainto be recovered than proved reserves. It is equally likely that theactual remaining quantities recovered will be greater or less than thesum of the estimated proved plus probable reserves.(5) "Possible" reserves are those additional reserves that are less certainto be recovered than probable reserves. There is a 10 percentprobability that the quantities actually recovered will equal or exceedthe sum of proved plus probable plus possible serves. It is unlikelythat the actual remaining quantities recovered will exceed the sum ofthe estimated proved plus probable plus possible reserves.(6) "Company working interest" means, in relation to the Company interestin production or reserves, its working interest (operating ornon-operating) share before deduction of royalties, plus the Company'sroyalty interests in production or reserves. "Company working interest"is not a term defined or recognized under NI 51-101 and does not have astandardized meaning under NI 51-101. Therefore, the "company workinginterest" reserves of the Company may not be comparable to similarmeasures presented by other issuers, and investors are cautioned that"company working interest" reserves should not be construed as analternative to "gross" or "net" reserves calculated in accordancewith NI 51-101.
Discussion of Reserves Volume
TheCompany had no reserves at January 1, 2010. Parex' crude oil reservesare located in Colombia's Llanos basin. The reserve volumes only reflectthe Company's 50% working interest in the Kona discovery. Productiontesting of the Company's other exploration wells in Colombia andTrinidad occurred in 2011 and has not been included in this reserveevaluation dated December 31, 2010.
Reserveadditions in 2010 were achieved from successful oil exploration and thediscovery of the Kona field in July 2010. The Company did not carry outacquisitions of any production or reserves in 2010. Proved reserves wereassessed in the Mirador formation and probable reserves were assessedin the C7, Mirador and Gacheta formations. Due to the effective date ofthe reserve evaluation, the GLJ report only included results for theKona-1 and Kona-2 wells. The results of the Kona-3 well and othertesting discussed below in the Colombia Exploration and OperationsUpdate were not incorporated in the GLJ Report.
Inaddition to Kona-1 and Kona-2 wells, GLJ included two, nine and elevenappraisal/development wells in the proved, proved plus probable, andproved plus probable plus possible, cases respectively. The Company's2011 capital expenditure budget includes drilling of up to sixappraisal/development wells into the Kona discovery subject toregulatory approval.
Reserves Evaluator Escalated Price Forecast
Reserveswere evaluated on the basis of GLJ's price forecast. The crude oilprice for the first five years of the GLJ evaluation is:
WTI Cushing Oklahoma Crude Oil Realized PriceYear (US$/bbl) (US$/bbl)----------------------------------------------------------------------------2011 88.00 69.552012 89.00 70.232013 90.00 70.912014 92.00 72.572015 95.17 75.412016+ +2%/year +2%/year
Colombia Exploration and Operations Update
TheKona-1 well on Block LLA-16 (Parex 50 percent working interest), wassuccessfully remediated in the Mirador formation in late November 2010.Production began at an initial test rate of 500 bopd and was increasedup to 2,900 bopd with a water cut of approximately 1 percent on naturalflow. Oil sales have been interrupted at times due to seasonal delays inDecember and current transportation and offloading capacity limitationsbeing experienced in the Llanos Basin. Over the past week, as truckingrestrictions have been lifted, the Kona-1 well has produced at a grossaverage rate of 2,771 bopd (1,386 bopd net).
TheKona-2 well was scheduled to be completed in the deeper GachetaFormation in January 2011, however, this operation has just recentlycommenced. If successful the well will be brought on-stream as a Gachetaproducer. If the Gacheta Formation cannot be successfully completed atKona-2, then we expect to remediate, complete and test the C7 formation,which indicated 50 feet of potential net oil pay on log analysis andhas not yet been tested in either of the Kona-1 or Kona-2 wells.
OnJanuary 5, 2011 the Kona-3 well was spud. Kona-3 was designed toevaluate the northern extent of the field and programmed to drill to adepth of 13,058 feet. The bottom hole location for the Mirador formationis 445 meters north of Kona-1 and approximately 865 meters north fromKona-2. Initial evaluation of well logs indicates potential net oil pay,measured as true vertical depth, of 20 feet in the C7 Formation and 40feet in the Mirador Formation which is in-line with the Company'spre-drill expectations. As of the morning of February 15, 2011 the rigwas running intermediate casing at 9,378 feet and will complete theoperation at 12,055 feet, prior to deepening the well to the targetdepth. Drilling operations are expected to be completed by late February2011.
The Kona oil treatment facility andterminal, located on the region's main paved all-season road, currentlyhas capacity for 8,000 barrels of fluid per day ("bfpd") and is beingexpanded to handle up to 25,000 bfpd by mid-April 2011. Originalfacility expansion plans were for a 10,000 bfpd facility.
Alonga new fault trend in Block LLA-16 the Supremo-1 well was drilled to adepth of 12,035 feet and recently tested. The well produced on pumpapproximately 2,500 bfpd from the Mirador formation, with a 31 degreeAPI oil rate of 500 bopd. The Supremo-1 well is currently suspended.Technical analysis has determined that Supremo-1 was drilled offstructure and it is planned in 2011 to drill Supremo-2 from the same padto a position up dip of the original bottom hole location to attempt tolocate the top of the structure.
Along the samefault trend as Supremo-1, the Goroka-1 well was drilled to a depth of12,037 feet. The well was cased and the Lower Gacheta and Miradorformations tested wet. Currently the Upper Gacheta Formation is beingcompleted for testing if appropriate.
On January19, 2011 the Kopi-1 well was spud. This well was drilled to a depth of10,993 feet and is located 18 kilometres south of the Kona discovery onthe same fault trend. The well has been cased to total depth and will betested following the completion of testing the Goroka-1 well.
Thenext wells to be drilled on LLA-16 are scheduled to be Kona-4, locatedapproximately 420 meters south of Kona-2, and Java-1 a new prospectlocated between the Kona field and the Barquerena field along the Konafault trend. Current plans are to dedicate one drilling rig to the Konadiscovery and one drilling rig to other LLA-16 drilling. In addition,Parex plans to acquire a further 70 square kilometres of 3-D seismic onthe south-east corner of Block LLA-16 in 2011.
OnBlock LLA-20 (Parex 50 percent working interest) the Conoto-1 andZocay-1 wells were drilled and cased to depths of 8,100 feet and 8,788feet respectively. Both wells targeted un-faulted, low reliefstructures. Wireline logs and mud gas logs from the Conoto-1 wellidentified reservoir quality sand in the C7 and Mirador formations. Wehad previously cautioned that nearby wells suggest that it is difficult,on the basis of wireline log interpretation, to differentiate betweenoil saturated reservoirs and those that have been flushed by freshwater. The Conoto-1 well tested and flowed non-commercial rates of 18degree API oil and was subsequently abandoned. The Zocay-1 well wasdrilled and abandoned without testing.
The nextdrilling prospect on Block LLA-20 is Cumbre, which will test a faulttrend located east of a producing field and west of Parex' Block LLA-57.A further 100 square kilometres of 3-D seismic is planned to beacquired on the north-west corner of Block LLA-20 in 2011.
Onblocks LLA-29 and LLA-30 (Parex 50% working interest), the blockoperator has advised Parex that it anticipates drilling will commence inthe fourth quarter 2011, later than planned as a result of delays inobtaining regulatory approval.
Colombia New Exploration Block LLA-57
OnFebruary 11, 2011, Parex signed an exploration contract for BlockLLA-57 (100% working interest) with the National Agency of Hydrocarbons("ANH"). Block LLA-57 was awarded to Parex in the 2010 Colombia BidRound. Parex is required to place a guarantee of approximately US$3.85million with the ANH. Plans for 2011 on Block LLA-57 are to acquire andprocess 165 square kilometres of 3-D seismic, with drilling expected tocommence in 2012.
Trinidad Exploration Update
Snowcap-1,an exploration well located on the Company's Trinidad onshore MorugaBlock, was drilled and cased in the third quarter of 2010. Based on theCompany's interpretation of wireline logs, mud gas, and cuttingssamples, Snowcap-1 encountered potential hydrocarbon bearing sandstones.Regulatory approval for a multi-zone test program for this well wasreceived in late 2010.
The Snowcap-1 well testedthe primary Herrera zone (4,590-4,605 feet) in a multi-point test overthe perforated interval at 4,597-4,603 feet. The final four day grossrate averaged 580 bopd of 35 API oil and 5.4 mmscfd with wellheadpressure of 600 psi on a 48/64th inch choke under natural flow. Thefinal six hours of flow on that choke averaged 500 bopd and 4.7 mmscfdat 580 psi. During the initial seven hour clean-up period, the zoneflowed at rates averaging 1,166 bopd and 1.6 mmscfd at 1,200 psi. Thewell is currently shut-in to record down-hole pressure build-up foranalysis of the test.
Parex also reports that adeep Eocene zone (8,099-8,132 feet) and a Herrera zone (5,026-5,040)tested wet. In addition, a second Herrera zone (4,685-4,695 feet) flowednon-commercial rates of hydrocarbon.
The Companyis evaluating follow-up appraisal locations to the Snowcap-1 discovery.At the completion of testing the Snowcap-1 well will be suspended until adevelopment plan is concluded and approved.
Wehad previously reported on June 14, 2010 that the Firecrown-1 well,located on the onshore Moruga Block, reached a total measured depth of8,701 feet and penetrated both the primary and secondary objectives inthe Herrera Formation. The well was cased to a depth of 8,400 feet toevaluate the potential of these prospective zones. In March 2011, Parexexpects to re-enter and deepen Firecrown-1 to a block qualifying depthof 10,500 feet prior to production testing. Regulatory approval to testthis well was received in late 2010. Post-earning, Parex' workinginterest for the Moruga Block will be 50 percent.
2011 Guidance Update
Colombia
For2011 Parex maintains its previously provided guidance that capitalexpenditure plans in Colombia would range between $70-$88 million withexit rate production guidance of 7,000-9,000 bopd, net before royalty.
Trinidad
Parex'current Trinidad portfolio is in the early stages of execution. Uponcompletion of well testing and the evaluation of the explorationresults, and the determination of marketing arrangements, the Companywill be better positioned to provide a 2011 production estimate for ourTrinidad program. For 2011 Parex maintains its previously providedguidance that capital expenditure plans in Trinidad would range between$23-$32 million.
Presentation at RBC Capital Markets' South American Energy Conference
Parexis pleased to advise that Mr. Wayne Foo, President and CEO is scheduledto present at the RBC Capital Markets' South American Energy Conferencein Toronto, Ontario on Tuesday, February 24, 2011 at 8:30 am MST (10:30am EST).
Presentation at the FirstEnergy/Societe Generale Canadian Energy Conference
Mr.Dave Taylor, Vice-President Exploration & Business Development isscheduled to present at the FirstEnergy/Societe Generale Canadian EnergyConference in New York, New York on Friday, March 9, 2011 at 7:05 amMST (9:05 am EST).
We seek Safe Harbor.