PDP NEWSAttention Business Editors:
Petrolifera's Argentina drilling success continues
CALGARY, Dec. 11 /CNW/ - Petrolifera Petroleum Limited (PDP - TSX)
announced today that its RN.PM a-1032 well, situated southwest of the
recently-tested 1019 oil well on the northern portion of its Puesto Morales
Block in the Neuquén Basin, Argentina, is in the process of being cased as an
indicated multi-zone oil discovery after completion of drilling and logging
procedures. This marks the fourteenth successive oil well or indicated oil
well drilled by the company on its Argentinean concession since late 2005.
There have been no dry holes and many of the wells are multi-zone discoveries
of light gravity crude oil and/or natural gas, in solution or non-associated
in the Quintuco Formation.
As a consequence, Petrolifera's production of crude oil has consistently
increased since late 2005 from about 300 barrels of oil equivalent per day
("boe/d) to around current levels of approximately 12,000-12,500 boe/d,
including current natural gas sales of approximately 3.5 mmcf/d, over double
previous volumes. These are being delivered to a local market through a
recently-expanded low pressure gas line. Additional natural gas volumes are
anticipated in 2007 once a new high-pressure natural gas pipeline, connecting
to existing infrastructure in the region, is completed. Initial volumes are
then anticipated to approach approximately 20 mmcf/d, with further increases
possible over the balance of 2007, upon completion of a new gas plant and
related facilities, targeted for the third quarter 2007.
Further crude oil production increases are also anticipated by year end
2006 as the company's 100 percent-owned 1019, 1018 and 1032 wells are
completed and placed onstream, productive capacity of other wells is more
fully realized and remedial work is conducted at previously-drilled wells
during the ensuing month before the company's anticipated 50-well 2007
drilling program is reactivated in mid-January.
Readers are cautioned that the conversion ratio of six thousand cubic
feet of natural gas to one barrel of oil used in calculating barrels of oil
equivalent is based on an energy equivalency conversion method primarily
applicable to the burner tip and does not necessarily represent a value
equivalency at the wellhead. Furthermore, boes may be misleading, particularly
if used in isolation.
THIRTY DAY PROGRAM
During the next thirty days and over the holiday season, Petrolifera
plans to test, complete and tie-in the 1019, 1018, 1032 and 1024 wells.
Testing at the 1019 well is now complete and the well is producing fluid at a
rate of approximately 320 bbl/d from zones in the Sierras Blancas and Catriel
Formations, with a measured 70 percent oil cut, resulting in a flow rate of
approximately 235 bbl/d of crude oil. As small fracs were conducted on several
of the productive zones in the well, it continues to clean up and may yield
increased oil volumes over time. Of note is that crude oil production is being
obtained for the first time from the zones in the Catriel Formation. Follow up
drilling, including wells to evaluate the Punta Rosada Formation at
structurally higher positions on this northeastern culmination, will occur
next year. A number of directional wells will be required due to the proximity
of surface locations to the water reservoir in the region.
The 1018 well is standing cased as an indicated oil discovery and it will
be tested during the next month, as will the 1032 discovery, which as
indicated appears to be very encouraging based on shows while drilling and
subsequent log analysis. In addition to these testing and completion programs,
Petrolifera plans to install a pump in the 1024 well and complete it for
production from a new previously-untested zone in the Sierras Blancas
Formation. Remedial work is also planned at the 1004 well, which continues to
flow oil but at rates below its productive capacity. Production from this wide
variety and number of zones at Puesto Morales underscores the continuing
prospectivity of the region. During 2007, additional work to evaluate the
indicated oil-bearing zones in the Quintuco Formation will also be undertaken.
Most if not all of the planned work during the next month will be
conducted with the existing service and completion rig under contract to
Petrolifera. These testing, completion and remedial programs are expected to
contribute additional productivity to Petrolifera in line with prevailing 2006
and 2007 guidance as contained in the company's presentation to shareholders
in October, 2006; this is posted under Investor Information - Presentations on
the company's website at www.petrolifera.ca.
RIGS
Petrolifera is pleased to report that it expects to have three and
possibly four drilling rigs available to it for its anticipated record
drilling program in Argentina during 2007.
The new service rig contracted to the company and recently imported into
Argentina for next year's activity has now been released from customs.
Petrolifera and the drilling contractor/owner of this rig have now agreed to
convert it to a drilling rig and it should be operational by mid-February,
2007. This rig will then primarily be used to drill shallower wells around
1,000 meters on the Rinconada Block to the east of Puesto Morales.
The new truck-mounted drilling rig which was imported into Argentina is
presently in customs. It is expected to be released shortly and is anticipated
to be operational by about mid-January, 2007, at which time Petrolifera will
recommence its drilling campaign at Puesto Morales. A second new drilling rig
being imported into the country is now anticipated to be available by
mid-March 2007. Importantly, this drilling rig will also be able to be
utilized for completions, which should streamline Petrolifera's program.
Accordingly, Petrolifera anticipates having three drilling rigs available
to it throughout most of 2007. Furthermore, the company was recently offered a
fourth rig by an established Argentinean contractor; this is also a new rig
which would be available by mid-year 2007. A decision on whether to contract
this rig is under evaluation; Petrolifera is examining if additional suitable
and qualified supervisory personnel are available to effectively manage a
further expansion of its drilling operations.
FACILITIES AND PIPELINE
The company is pleased to report that deliveries of Puesto Morales crude
oil through its newly-installed six-inch crude oil pipeline, which connects to
main transmission facilities situated approximately 25 kilometers west of the
field, commenced approximately one week ago. Initial deliveries are
approximately 600 cubic meters per day (approximately 3,700 bbl/d), with the
balance of Petrolifera's production still being trucked to third party
processing and delivery facilities. As previously noted, this will continue
until the company's own expanded treatment and water handling facilities are
completed in the spring of 2007. The expansion and consequent delay in
completion of these facilities was necessitated by the company's significant
drilling success in the second half of 2006 and due to the likelihood of
introducing some form of pressure maintenance to its operations during 2007.
This would assist the company in sustaining, extending and expanding its
growing production levels in ensuing years.
As previously mentioned, design and construction of a high pressure
natural gas pipeline and a related natural gas plant to capture and sell
solution gas produced in conjunction with the company's Sierras Blancas and
Punta Rosada crude oil is proceeding; Petrolifera also plans to drill
approximately ten Quintuco natural gas wells in the first half of 2007 to
augment the solution gas volumes with deliveries of non-associated natural gas
from this extensive gas reservoir. Completion of the gas plant will also
permit the company to recover natural gas liquids for sale by the third
quarter of 2007.
OTHER
Petrolifera has now completed its new 3D seismic program over the balance
of the Puesto Morales and Rinconada Blocks which had not previously been
evaluated. The data will be processed and then interpreted. It is hoped that a
number of additional drillable prospects will emerge from this program in a
manner similar to that which occurred on the northern portion of the Puesto
Morales Block, which upon drilling has led to the significant production gains
experienced through 2006.
Petrolifera has had a very successful 2006 and will be busy augmenting
its Argentinean production base with completions and workovers during the next
month, following which time the company will reactivate its multi-rig,
multi-well drilling program for 2007 on both the Puesto Morales and Rinconada
Blocks which comprise the company's 100 percent-owned concession. With over
six times as many wells anticipated for Argentina in 2007 as compared to wells
drilled in 2006, the company remains optimistic over its ability to add
significant reserves and productivity next year. The company anticipates
financing its total $130 million 2007 capital budget in Argentina, Peru and
one other country in South America from forecast net revenues in Argentina.
Surplus funds will be added to working capital, which now stands at
approximately $45 million. Petrolifera has no debt.
Forward Looking Statements
This press release contains forward-looking statements, including but not
limited to future exploration and development plans, anticipated future
production, future capital expenditures, anticipated completion and/or
expansion of infrastructure and transportation systems and future sources and
uses of funds. These statements are based on current expectations that involve
a number of risks and uncertainties, which could cause actual results to
differ materially from those anticipated. These risks include, but are not
limited to risks associated with the oil and gas industry (e.g. operational
risks in development, exploration and production delays or changes in plans
with respect to exploration or development projects or capital expenditures;
the uncertainty of reserve estimates; the uncertainty of estimates and
projections in relation to production, costs and expenses and health, safety
and environmental risks), the risk of commodity price and foreign exchange
rate fluctuations, the uncertainty associated with negotiating with foreign
governments and risks associated with international activity. Additional risks
and uncertainties are described in the company's Annual Information Form which
is filed on SEDAR at www.sedar.com.
The company's ability to complete its capital program and potentially
increase production volumes and reserves is dependent on access to services,
drilling rigs and equipment. Similarly, the company's ability to increase
sales of oil and natural gas is dependent on continued successful drilling,
maintenance and/or increase of current production and completion of certain
infrastructure and transportation systems that are currently under
construction or require expansion. There can be no assurance that the company
will be able to access the required services and equipment based on the
company's planned timetable to ensure the completion of the company's capital
program and the construction or expansion of required infrastructure and
transportation systems. Due to the risks, uncertainties and assumptions
inherent in forward-looking statements, prospective investors in the company's
securities should not place undue reliance on these forward-looking
statements. Forward looking statements contained in this press release are
made as of the date hereof and are subject to change. The company assumes no
obligation to revise or update forward looking statements to reflect new
circumstances, except as required by law.
For further information: Richard A Gusella, Executive Chairman, Petrolifera
Petroleum Limited, Phone: (403) 538-6202, Fax: (403) 538-6225,
inquiries@petrolifera.ca, www.petrolifera.ca