PetroLatina reported that Ryder Scott Company, L.P. has recently completed an updated assessment of the reserves, future production and income attributable to the Company's concessions in Colombia as at November 30, 2009.
The Company's proven hydrocarbon reserves principally comprise approximately 95 percent oil and 5 percent gas. Although reserves have increased across all categories, the largest increase is in Possible Reserves, reflecting the Company's discovery during 2009 of additional oil reserves at its Colon and Chuira fields. As these two fields are in the early stages of development, the reserves assigned by Ryder Scott relate only to that portion of the discovery for which well data is currently available. The Directors anticipate that further drilling planned for 2010 will serve to substantially increase these Possible Reserves as well as moving an element of them into the Probable Reserves and Proved Reserves categories.
In addition to the increase in reserves reported above, the Company notes that during the period from December 31, 2007 to November 30, 2009 it has produced and sold a total of 0.273 million barrels of oil.
Ryder Scott's report also confirmed its 2007 Reserves Report finding to the effect that significant 3P reserves remain to be developed and produced in the Santa Lucia field. These amount of 3.415 million barrels recoverable net to the Company. A further five development drilling locations have been identified in Santa Lucia and the Company has therefore mobilised a rig to this field and is currently drilling the Santa Lucia-4 well. Although the Company holds only a 20 per cent. interest in this field, the La Paz reservoir produces oil of higher gravity and has higher production rates and greater ultimate per well recoveries than those experienced in several of the Company's other operated fields, such as Los Angeles.
Ryder Scott's study also reviewed the exploration prospects currently being evaluated by PetroLatina and concluded that the Company's estimate that these could contain approximately 19.24 million barrels of recoverable oil on an unrisked basis was reasonable. These Prospective Resources principally relate to resources potentially recoverable from: (a) the Zoe prospect on the PetroLatina operated Midas block held under Colombia's Agencia Nacional de Hidrocarburos ("ANH") terms and which was drilled, logged and cased after the date of the Ryder Scott report; (b) potential extensions to the existing PetroLatina operated Santa Lucia field, where development drilling is now under way; (c) resources potentially relating to a seismically defined structural prospect known as the Santa Lucia Sur which is situated south of and on trend with the producing Santa Lucia field; and (d) the extension to the south of that same Santa Lucia Sur prospect into the PetroLatina operated La Paloma block. This portion of the prospect has 3D seismic coverage and is known as Llamador. La Paloma is also held under ANH terms and contains the Company's 2009 Colon discovery.
Based upon crude oil futures prices as of 30 November 2009 adjusted for each property, the Net Present Value at a 10 per cent. discount ("NPV10") of the aforementioned Proved Reserves was estimated by Ryder Scott at $71 million (December 2007: $47.7 million). The NPV10 of the 2P reserves totalled $140.3 million (December 2007: $108.8 million) and the NPV10 of the 3P reserves totalled $247.0 million (December 2007: $164.9 million).
The above NPV10 valuations do not take account of the exploration potential in respect of the Company's interests in Colombia and Guatemala which the Directors believe could be substantial. Furthermore, Ryder Scott's assessment does not include any valuation of the Company's Rio Zulia-Ayacucho pipeline asset in the Catatumbo basin, which was valued at up to $30 million on a PV12 basis by Gaffney Cline & Associates in 2006.
Juan Carlos Rodriguez, Chief Executive Officer of PetroLatina, said, "We believe that Ryder Scott's report supports our view that PetroLatina has significant potential to create value for its shareholders. The sizeable increase in the value of our reserves reflects the eight successful wells drilled by the Company in 2009. Our plan continues to be to convert our Probable and Possible Reserves into Proved Reserves and considerably increase production and cash flow through the ongoing drill program."
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