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Petroamerica Announces 2011 Year-End Reserves and Provides an Operational Update of Current and Planned Activities

March 21, 2012

 

 

Petroamerica Oil Corp. ("Petroamerica" or the "Company") (TSX-V: PTA), a company focused on oil exploration and production in Colombia, is pleased to announce the results of its 2011 year-end independent reserves evaluation and provide an operational update of the Company’s current and planned activities in Colombia.

Company highlights include (all monetary amounts referenced are in Canadian dollars):

  • Proved reserves of 1.777 million barrels of oil (Company working interest), with a before tax net present value (discount 10% and after royalties) of $70.11 million.
  • Proved plus probable reserves of 3.027 million barrels of oil (Company working interest), with a before tax net present value (discount 10% and after royalties) of $122.55 million.
  • Proved, probable plus possible reserves of 4.441 million barrels of oil (Company working interest), with a before tax net present value (discount 10% and after royalties) of $187.22 million.
  • Proved plus probable net present value per share of $0.21 based on 578,331,594 common shares outstanding.
  • Proved, probable plus possible net present value per share of $0.32 based on 578,331,594 common shares outstanding.
  • Plans to appraise the Las Maracas light oil discovery.
  • Declaration of commerciality for the Balay oil discovery.
  • Plans to drill six exploration wells on independent prospects all covered by 3D seismic.

 

2011 Year-End Reserves

The Company’s Colombian reserves were evaluated by independent qualified reserves evaluator, GLJ Petroleum Consultants Ltd. ("GLJ"), and the reserves summarized here are taken directly from the independent reserves report prepared by GLJ, dated March 14, 2012, with an effective date of December 31, 2011 (the "GLJ Report"). The GLJ Report was prepared in compliance with the National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities) and in accordance with the definitions, standards and procedures of COGE (Canadian Oil and Gas Evaluation) Handbook. A complete filing of the Company’s reserves as required by NI 51-101 will be will be filed on SEDAR in the near future.

 

The following table presents a summary of the Company’s oil reserves as of December 31, 2011.

 

 

2011 Company Reserves (before royalty) MBbl  Proved Proved plus Probable Proved plus Probable plus Possible
Light/Medium Oil 1,777 2,923 4,182
Heavy Oil   104 259
Total Company Working Interest 1,777 3,027 4,441

 

 

2011 Year-end Reserves Summary

The following table presents a summary of the Company’s net present values of future revenues as of December 31, 2011.

 

2011 Year-end Reserves Net Present Value Before Tax Summary

 

Net Present Value M$ (before Tax, after Royalty) Proved Proved plus Probable Proved plus Probable plus Possible
0% Discount 90,948 159,918 248,314
5% Discount 79,353 139,058 213,767
10% Discount 70,109 122,548 187,219

The oil price forecast used to calculate the net present values can be found on the GLJ website at www.gljpc.com.

 

Reserves Discussion

All of the Company’s oil reserves are located in the Llanos Basin of Colombia. Reserve additions for 2011, as evaluated by GLJ, were generated by exploration success at the Las Maracas light oil discovery on the Los Ocarros Block, discovery and successful appraisal drilling at the Balay discovery on the Balay Block, and the addition of a 50% working interest in the Chiriguaro heavy oil discovery by way of a relinquishment by the previous operator of the El Eden Block.

The Company has transitioned from a pure exploration company with no reserves reported at the end of 2010, to an exploration and production company with 2011 year-end 2P (proven plus probable) reserves of 3.027 million barrels before royalties.

97% of the 2P (proven plus probable) reserves are classified as light to medium oil from the Balay (28 degrees API) and Las Maracas discoveries (37 degrees API), and 3% is heavy crude (13.5 degrees API) coming from the Chiriguaro discovery.

Exploration and Appraisal Update

In 2012, the Company plans to participate in the drilling of six exploration wells. All of the prospects to be drilled are covered by 3D seismic and are located in the Los Ocarros, El Eden, El Porton, CPO-1, LLA-10 and SSJN-5 Blocks. Most of the exploration drilling will take place in the second half of 2012.

To date, the Company’s wholly owned subsidiary, Petroamerica International Corp., has been recognized by the Colombian National Hydrocarbon Agency (ANH) as to its participating interests in the Balay, Los Ocarros, El Eden and El Porton Blocks, and applications to be recognized as to its participating interest in the other blocks, subject to ANH approval, are underway.

Operations Update

Commerciality declarations were made on the Chiriguaro and Balay oil fields in December 2011 and March 2012 respectively. The Company plans to work over the non-producing Chiriguaro-1 well in the fourth quarter of 2012, to remedy a mechanical problem with the well and put it back on production. The development plan for the Balay field will be finalized between partners during April of this year. The Balay-3 appraisal well was drilled in the northern part of the structure and the results were announced in January 2012. It is planned to convert this well into a water disposal well. 

The Las Maracas-2 sidetrack discovery well will see first oil in the second quarter of 2012, and two follow-up appraisal wells will be drilled. These wells will be drilled back to back, with the first well anticipated for the second quarter of 2012. The first well will also test the deeper exploration potential in the Gacheta and Une Formation reservoirs in the Las Maracas structure. In the event of success, an option is being retained to drill an additional two follow-up early development wells in the second half of the year.

The Company estimates that for the three months ending December 31, 2011 crude oil production averaged approximately 388 bopd net after royalty. All of this production was coming from the Balay-1 and Balay-2 wells.

Definitions of Reserve Categories

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual 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.

"Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.

Forward Looking Information

This press release contains forward-looking statements. The use of any of the words "anticipate", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. Statements relating to "reserves" or "resources" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future.

The forward-looking statements are based on certain key expectations and assumptions made by Petroamerica, including, but not limited to:

•oil and natural gas production levels;

•prevailing commodity prices and exchange rates;

•availability of labour and drilling equipment;

•timing and amount of capital expenditures;

•general economic and financial market conditions;

•governmental approvals of contracts entered into with industry partners in relation to properties and operations;

•government regulation in the areas of taxation, royalty rates and environmental protection;

•production of new and existing wells and the timing of new wells coming onstream;

•the performance characteristics of oil and natural gas properties;

•the size of oil and natural gas reserves or resources;

•the ability to raise capital and to continually add to reserves and resources through exploration and development; 

•possible reserves are those reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum or exceed the sum of proved plus probable plus possible reserves; and

•the success of exploration and development activities.

Although Petroamerica believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Petroamerica can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. These statements speak only as of the date of this press release. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to:

•volatility in market prices for oil and natural gas;

•volatility in exchange rates;

•liabilities inherent in oil and natural gas operations;

•changes or fluctuations in production levels;

•stock market volatility and market valuation of our stock;

•uncertainties associated with estimating oil and natural gas reserves and resources;

•competition for, among other things, capital, acquisitions of reserves and resources, undeveloped lands and skilled personnel;

•incorrect assessments of the value of acquisitions and exploration and development programs;

•geological, technical, drilling, production and processing problems;

•changes in legislation, including changes in tax laws, royalty rates and incentive programs relating to the oil and natural gas industry; and

•changes in regulation or policy positions by governments with respect to the development of oil and gas resources or foreign ownership of natural resources.

Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Petroamerica does not undertake any obligation to publicly update or revise any forward-looking statements other than as required under applicable securities laws.

The estimated values for future net revenue do not represent fair market value.

The reserves estimates provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided. 5

Neither the 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 release.

Petroamerica is a junior oil and gas company operating in Colombia and its shares are listed on the TSX Venture Exchange under the symbol "PTA".

ON BEHALF OF PETROAMERICA OIL CORP.

"Nelson Navarrete"

President and CEO

 

FOR FURTHER INFORMATION PLEASE CONTACT: Nelson Navarrete

President and CEO

Colin Wagner

CFO

Tel: 57-1-629-3534

Email: investorrelations@pta-oil.com

Tel: 403-237-8300

Email: investorrelations@pta-oil.com