PetroMagdalena Looks Ahead at 2012 Exploration and Drilling
PetroMagdalena Energy Corp. provided an update on its ongoing exploration program, cash and debt balances, and announced its production results for 2011 following the Company's fiscal year end.
Luciano Biondi, Chief Executive Officer of the Company stated, "We are entering 2012 with a full exploration and development drilling program on the back of a challenging but successful year repositioning PetroMagdalena into a focused junior oil and gas player, operating in the most prolific basins in Colombia. I am pleased with the discoveries at Cubiro and Arrendajo which reinforce our focus on finding economic, near-term production opportunities within our portfolio.
"We project approximately $45 million in net cash flow from operations (after G&A, equity tax installments and debt service) for 2012, based on an $80 WTI for estimated average annual production of 4,500 boepd ("barrels of oil equivalent per day"). This represents the midpoint of our previously disclosed range of production guidance of 4,300 boepd to 4,700 boepd for 2012. Together with our December 31, 2011 cash balance of approximately $15 million and expected proceeds from asset dispositions, we are fully funded for our planned capital expenditure program of approximately $50 million to $60 million.
"With this capital program, we fully expect to grow our resources and reserves, add incremental production in 2012 from our core assets and maximize value from our entire portfolio of assets. The Company has rigs available and environmental permits are in good standing at all our exploration targets in 2012."
Yopo Discovery at Cubiro
PetroMagdalena has discovered a new field with the Yopo 1X exploration well, which was drilled to explore the prospectivity of the Carbonera Formation in the Yopo Prospect, located on Polygon B of the Cubiro Block, where the Company holds a 70 percent working interest ("WI"). The Yopo 1 well was perforated in the Carbonera C7 sand and it is currently testing at 970 barrels per day of 39.9 degrees API oil with 4.7 percent BS&W ("Basic Sediments and Water"), on natural flow over the initial 6.5 hour stabilized period at an average of 385 psi well head pressure, testing will continue.
The Yopo 1 well was spud on December 11, 2011, drilled to a final depth of 6,790 feet measured depth ("MD") and logged on December 29, 2011. The top of the Carbonera C7 sand was found at a depth of 5,871 feet MD. Petrophysical data show 8 feet of net pay in C7 A, with porosity of 27 percent and hydrocarbon saturation of 60 percent; and 25 feet in C7 B, with porosity of 28 percent and oil saturation of 80 percent. Based on seismic interpretations, the accumulation discovered by Yopo 1 is a 2 km long structure, corresponding to the typical exploration play in the Llanos Basin. The structure is on trend with the Palmarito and Petirrojo fields to the north and south respectively.
Azor Discovery at Arrendajo
PetroMagdalena has discovered a new field with the Azor-1X exploration well, which was drilled to explore the prospectivity of the Carbonera Formation in the Arrendajo Block, where the Company holds a beneficial 67.5 percent WI, subject to ANH approval. The Azor-1 well was perforated in the Carbonera C5 sand and it is currently testing at 752 barrels per day of 35.5 degrees API oil with 1 percent BS&W, stabilized natural flow over an initial 8 hour period, at an average of 265 psi well head pressure, testing will continue.
The Azor-1 well was spud on December 24, 2011, drilled to a final depth of 7,225 feet MD and logged on January 6, 2012. The top of the producing Carbonera C5 sand was found at a depth of 6,724 feet MD. Petrophysical data show 41 feet of net pay in C5, with porosity of 28 percent and hydrocarbon saturation of 80 percent.
The Azor-1 well is located on a structural trend with prospects to the north and south. This discovery reveals significant potential for Carbonera C5 in the Arrendajo Block, where there are five additional prospects to be targeted with future exploration drilling.
2012 Exploration Program
The Company's fully funded exploration program includes 7 exploration wells in the Llanos basin; the targeted exploration drilling program is outlined below along with management's volumetric estimates based on 3D seismic information and analogies to off-setting wells.
2012 Development Drilling Program
10 development wells including one injection well are scheduled for the Cubiro Block in 2012. These development wells are targeted for drilling with 1 well in the first quarter of 2012 and 3 wells in each subsequent quarter. The development drilling program will be reviewed and modified with the results of the exploration program and the Company will provide regular updates to the market.