TORONTO, Oct. 26, 2011 /PRNewswire/ - PetroMagdalena Energy Corp. (TSXV: PMD) announced today that it has received an independent reserves evaluation report dated September 30, 2011 (the "Petrotech Report") prepared by Petrotech Engineering Ltd. of Burnaby, British Columbia, relating to the current reserve base in Cubiro, the Company's oil and gas exploration and production property located in the Llanos Basin of Colombia. The combined proved plus probable ("2P") reserves for this block (gross to the Company) increased by 5.0 million barrels of oil ("MMbbls"), or 86%, compared to those reported in December 2010. The Company's gross (before royalties) 2P reserves at Cubiro at September 30, 2011 amount to 10.8 MMbbls, having a total net present value ("NPV") (10% discount, before tax) of US$263 million, an increase of US$126 million since December 2010. The Report also reflects a 73% increase in gross proven reserves ("1P") to a total of 3.0 MMbbls.
Luciano Biondi, Chief Executive Officer commented: "We are pleased with the results of this Cubiro update as it demonstrates our belief in the long term production potential of these fields, as we have added reserves in both proved and probable categories. Our development plan for Cubiro includes three additional wells to be drilled in the third and fourth quarter of this year as a result of this success."
These additional reserves are the result of the 2011 drilling campaign that started mid-July, resulting in three light oil discoveries: Petirrojo, Copa B and Copa AS. The Company also increased 2P oil reserves by approximately 1.0 MMbbls through the acquisition on April 15, 2011 of an additional 32.13% working interest in Block C of Cubiro.
The Petrotech Report provides the following summary of the Company's total proved and probable reserves from its interests in the Cubiro block at September 30, 2011:
| L & M Oil Reserves (Mbbls) | ||||||||||||||
| 100% | Gross | Net | ||||||||||||
| Proved Developed Producing | 1,981 | 1,216 | 1,119 | |||||||||||
| Proved Undeveloped | 2,776 | 1,734 | 1,595 | |||||||||||
| Total Proved | 4,757 | 2,950 | 2,714 | |||||||||||
| Probable | 13,076 | 7,873 | 7,243 | |||||||||||
| Total 2P | 17,833 | 10,823 | 9,957 | |||||||||||
The Petrotech Report provides the following summary of the Company's future net revenue, discounted at 0%, 5%, 10%, 15% and 20%, before income tax, from its interests in the Cubiro block at September 30, 2011:
| NPV of Future Net Revenue | |||||||||||||||||||||||
| Before Tax Discounted (in $M) @ | |||||||||||||||||||||||
| 0% | 5% | 10% | 15% | 20% | |||||||||||||||||||
| Proved Developed Producing | 52,591 | 48,103 | 44,287 | 41,013 | 38,177 | ||||||||||||||||||
| Proved Undeveloped | 60,075 | 52,801 | 46,816 | 41,829 | 37,624 | ||||||||||||||||||
| Total Proved | 112,665 | 100,904 | 91,103 | 82,842 | 75,801 | ||||||||||||||||||
| Probable | 273,431 | 213,731 | 172,089 | 142,006 | 119,602 | ||||||||||||||||||
| Total 2P | 386,097 | 314,635 | 263,191 | 224,849 | 195,403 | ||||||||||||||||||
The following table provides a comparison of the 2P Cubiro block reserves in the Petrotech Reports dated as of September 30, 2011 and December 31, 2010:
| L & M Oil Reserves Mbbls | ||||||||||||||||||||
| September 30, 2011 | December 31, 2010 | Change in 2P Reserves | ||||||||||||||||||
| Gross | Net | Gross | Net | Gross | ||||||||||||||||
| Proved Developed Producing | 1,216 | 1,119 | 952 | 876 | 264 | |||||||||||||||
| Proved Undeveloped | 1,734 | 1,595 | 755 | 695 | 979 | |||||||||||||||
| Total Proved | 2,950 | 2,714 | 1,707 | 1,571 | 1,243 | |||||||||||||||
| Probable | 7,873 | 7,243 | 4,124 | 3,794 | 3,749 | |||||||||||||||
| Total 2P | 10,823 | 9,957 | 5,831 | 5,365 | 4,992 | |||||||||||||||
The following table provides a reconciliation of the 2P Cubiro block reserves in the Petrotech Reports dated as of September 30, 2011 and December 31, 2010:
| Gross L&M Oil Reserves (Mbbls) | |||||||
| Total Cubiro block 2P reserves, December 31, 2010 | 5,831 | ||||||
| Acquisition of 32.13% interest in Cubiro C, April 15, 2011 | 972 | ||||||
| Discoveries: | |||||||
| Petirrojo-1 | 2,079 | ||||||
| Copa B | 1,233 | ||||||
| Copa AS | 1,831 | ||||||
| Technical revisions | (639) | ||||||
| Production during the period | (484) | ||||||
| Total Cubiro block 2P reserves, September 30, 2011 | 10,823 | ||||||
The Petrotech Report reserve estimates set out in this press release were prepared in accordance with the requirements of Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Capitalized terms related to resource classifications used in this press release are based on the definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook.
Petrotech has acted independently in the preparation of the Petrotech Report. Petrotech and its employees have no direct or indirect ownership in the properties appraised or the areas of study described in the report.
Reserves are classified according to the degree of certainty associated with the estimates. Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
All estimated values contained in this press release do not represent fair market value.
PetroMagdalena is a Canadian-based oil and gas exploration and production company, with working interests in 19 properties in five basins in Colombia. Further information can be obtained by visiting our website at www.petromagdalena.com.
All monetary amounts in U.S. dollars unless otherwise stated. This news release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the business, operations and financial performance and condition of PetroMagdalena. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of PetroMagdalena; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of PetroMagdalena and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated. Although PetroMagdalena has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. PetroMagdalena undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
SOURCE PetroMagdalena Energy Corp.
