The Company is presently fully focused on Colombia after the sale of its assets in Guatemala for $4 million in cash in May 2007, This decision was made following discouraging drilling results.
PetroLatina retains a 20% interest in the first three wells to be drilled in Guatemala in the near future.
In Colombia, the Company holds 50% and 25% interests in the Los Angeles and Santa Lucia fields on the Tsquirama license, respectively, and a 100% interest in the Dona Maria field which together provided a daily production of approximately 450 barrels per day in the first six months of 2007.
In April 2006 the Group acquired an interest in two exploration blocks with an 85% interest in Midas and an indirect 80% interest in La Paloma, New seismic was acquired in March/April this year over the La Paloma block and the results show a very promising large 4 way dip closure. It is planned to drill an exploration well within 3 to 4 months. Planned total depth is approximately 10,000 ft.
Presently, new seismic is being acquired over the Midas block and first results are encouraging. It is planned to drill an exploration well to approximately 8,000 ft following the La Paloma well.
The terms and the conditions of the extension of the Tsquirama license have been successfully negotiated with Ecopetrol. We are currently waiting for the final approval by the Board of Ecopetrol which should not take more than 4 weeks. The delay in the process is caused by new procedures set by the Minister of Hydrocarbons for all companies negotiating future extensions.
The Seraffin gas project is ready to commence production, However the gas pipeline owner is currently demanding a letter from Ecopetrol underwriting the quality of the gas. PetroLatina is holding discussions with all parties involved to find a quick solution.
PetroLatina also owns the Rio Zulia-Ayacucho pipeline in the prolific Catacomba basin which transports crude oil. Present exploration/exploitation activities in this area should increase the volume of the crude oil resulting in an increased cash flow.
In the first 6 months of 2007, turnover was $3,110,000 and gross profit $1,926,000, Loss on ordinary activities before tax was $2,926,000
Administrative expenses of $4,776,000 were high for this period. As a result, a decision was made to close the office in London and reduce the salaries of senior management. Total savings are in excess of $2 million per year.
Present outstanding debt with Macquarie bank is about $5.3 million. Outlook
Stable production of approximately 450 barrels per day plus incremental production after the extension approval in the Tisquirama license, the future Seraffin gas production, and some very exciting exploration blocks where two wells will be drilled, create a viable Company with upside. In addition, the Company is analysing what the best way is to capitalise on the opportunities currently available in the market.
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