Petrolifera Petroleum announced its year end 2009 financial and operating results.
HIGHLIGHTS FOR 2009
- La Pinta 1X drilled and suspended as an indicated light gravity 44 degree API crude oil discovery; remediation and testing underway
- Completed 440 km 2D seismic program on Block 106 in Peru; interpretation continuing
- Farmed out Vaca Mahuida Concession in Argentina, retaining a 25% working interest and operatorship
- Proposed sale of Argentina assets terminated; retained to fund future activity with solid cash flow base
- Completed a $58.5 million equity raise with potential for an additional $40 million from warrants
- Secured the Magdalena License over an excellent prospect at San Angel in the Lower Magdalena Basin, Colombia
- Farmed out Turpial License in the Middle Magdalena Basin, Colombia on favorable terms
Despite making the considerable progress embodied in our 2009 highlights, it was a difficult and disappointing year for the company. Our efforts to sell our interests in Argentina failed to attract acceptable bids in line with our internal expectations. Our significant exploratory well at La Pinta in the Upper Magdalena Basin, of Colombia experienced drilling problems and cost overruns. Despite identifying an accumulation of light gravity crude oil, we were unable to adequately test the oil-bearing Cienaga de Oro Formation after
two attempts. We are now moving uphole to evaluate a prospective zone in the Upper Porquero Formation in the well. Our production and reserves declined during the year, primarily affected by a disappointing waterflood performance in the northern portion of the Puesto Morales Norte Field. Our overall capital program was disappointing. We experienced our first full year loss
since going public in 2005.
On the positive side, we were able to raise new equity capital during the year, albeit at lower prices than we would have preferred. This was dictated by market conditions and the need to enhance liquidity in a very uncertain economic environment. We continued to upgrade our assessment of our high potential acreage in Peru and Colombia and remain optimistic about the prospectivity of our lands. We did reduce our reserve-backed indebtedness during the year and are in the midst of renegotiating this facility, with an anticipated extension of term, to provide more financial flexibility.
While we were successful in negotiating several smaller farmout agreements on certain of our lands, we have not yet secured a suitable arrangement on our higher potential lands in Colombia and Peru. This primarily reflected the fallout from the collapse of commodity prices and financial and credit markets in late 2008 and early 2009, causing prospective farminees to step back from new commitments pending affirmation or a more stable operating environment. This now appears to have occurred, as there is a discernible increase in industry interest in our well-defined exploration opportunities, including in Peru.