Mar. 1, 2011 (Canada NewsWire Group) --
CALGARY, March 1 /CNW/ - Petrolifera Petroleum Limited (PDP - TSX) announces today that it has received the estimates of the company's 1P ("Total Proved") , 2P ("Total Proved plus Probable") and 3P (Total Proved plus Probable plus Possible) reserves, as prepared by GLJ Petroleum Consultants Ltd. of Calgary, Alberta ("GLJ") in a report with an effective date of December 31, 2010 ("2010 Report"). The company's 1P, 2P and 3P reserves all increased on a year over year basis, with exploration drilling success at Brillante in Colombia more than offsetting 2010 production of crude oil, natural gas liquids and natural gas in Argentina and downward technical revisions, primarily to the estimate of the company's Puesto Morales Norte crude oil reserves. Expressed on a barrel of oil equivalent basis, Petrolifera's 1P reserves increased 20 percent, 2P reserves increased 17 percent and 3P reserves increased 60 percent. The company did not have GLJ conduct any resource evaluations. Year-end 2010 2P reserves, expressed on an equivalent basis, were 19.3 million boe. Sixty-four percent of equivalent 2P reserves were located in Argentina and 36 percent were located in Colombia.
The 2010 Report and the estimates provided herein were prepared using assumptions and methodology guidelines outlined in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and in accordance with National Instrument 51-101 ("NI 51-101"). Comparisons provided herein with respect to Petrolifera's reserves are to estimates contained in a report prepared by GLJ with an effective date of December 31, 2009 ("2009 Report"). The 2010 Report was prepared utilizing the GLJ January 1, 2011 price forecast, effective December 31, 2010 and adjusted to Petrolifera's asset mix and specific pricing circumstances extant or anticipated in Argentina and in Colombia. In the 2010 Report, future net revenue is calculated after deduction of forecast royalties, operating expenses, capital expenditures and well abandonment costs but before corporate overhead or other indirect costs, including interest and income taxes. The pre-tax present value of future net revenue ("present value" or "PV") is calculated by GLJ using various discount rates; this release will provide the 10 percent present value of estimated future net revenue ("PV 10") before deduction for future income taxes.
All references to barrels of oil equivalent ("boe") are calculated on the basis of 6 mcf: 1 bbl. Readers are cautioned that the conversion used in calculating barrels of oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Furthermore, boe may be misleading if used in isolation. Future net revenues disclosed herein do not represent fair market value. Also, estimations of reserves and future net revenue to be discussed in this press release constitute forward-looking information. See "Forward Looking Information" below.
Reserve Volumes and Values
Total proved reserves ("1P") of crude oil, natural gas liquids and natural gas, expressed on an equivalent basis, were estimated to be 10.9 million boe, of which 7.6 million boe were located in Argentina and the balance in Colombia. Total 1P reserves were 20 percent above 2009 levels. Argentinean 1P reserves were 16 percent lower than at year end 2009, reflecting technical revisions and 2010 production of 1.3 million boe, partially offset by drilling extensions and improved recovery at Rinconada and exploration discoveries at Vaca Mahuida. Colombian 1P reserves were estimated at 3.2 million boe, primarily reflecting the impact of the significant natural gas and natural gas liquids exploration discovery at Brillante, located on the Sierra Nevada License in the Lower Magdalena Basin onshore Colombia. This well was assigned 1P natural gas reserves of 16.9 Bcf and 87 thousand barrels of natural gas liquids (2.9 million boe) and technical revisions to the La Pinta well added a further 332 thousand equivalent boe, comprised of both crude oil and natural gas additions primarily associated with successful testing of the Porquero Formation in the well. Brillante is an excellent well and there appears to be considerable development potential associated with this project.
The company's 1P reserves were assigned a PV 10 of $139.4 million which was a 10 percent decrease from amounts calculated for 2009, primarily due to pricing differences resulting from the change in the company's reserve mix between crude oil and natural gas on a year over year basis.
Total proved and probable reserves ("2P") of crude oil, natural gas liquids and natural gas, expressed on an equivalent basis, were estimated to be 19.3 million boe, of which 12.4 million boe are in Argentina and 6.9 million boe are in Colombia. This represents an increase of 17 percent over 2009, and again reflects the profound impact of the Brillante discovery which added 6.4 million boe, more than offsetting production and technical revisions during the year. The company's 2P reserves were assigned a PV 10 of $250.9 million, a decline of approximately two percent, in part due to lower initial natural gas prices assumed for Colombia until a more complete development program at Brillante can be accomplished.
The company's proved, probable and possible reserves ("3P") were estimated to be 39.3 million boe, an increase of 60 percent over 2009 levels of 24.6 million boe. These were assigned a PV 10 as at December 31, 2010 of $535.4 million, an increase of approximately 41 percent over year-end 2009 estimates of $380 million. As with 1P and 2P reserve estimates, the results at Brillante were the dominant contributor to the year over year increase, with 3P reserves of 18.9 million boe, comprised of 110 Bcf of natural gas and 578,000 barrels of natural gas liquids, assigned to this project.
The volume of possible reserves estimated at 20 million boe underscores recognition by GLJ of the development potential at Brillante in Colombia. These estimates did not include a review of the company's undeveloped exploratory concessions or the value of new exploratory drilling opportunities at Vaca Mahuida and Puesto Guevara in Argentina nor of Petrolifera's exploratory holdings or new exploratory drilling opportunities in Colombia and none of the company's extensive holdings in Peru. The company is currently drilling its San Angel prospect on the Magdalena License which offsets the Sierra Nevada License in Colombia.
Petrolifera agreed to sell a 25% working interest in the Sierra Nevada License in Colombia for cash and this sale remains subject to receipt of certain required governmental approvals. Reserve volumes and PV 10 values discussed here in do not reflect this disposition.
Notes:
1) Proved reserves are those reserves that can be estimated with a
high degree of certainty to be recoverable. There is at least a 90%
probability that the quantities actually recovered will equal or exceed
the estimated proved reserves.
2) 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.
3) Possible reserves are those additional reserves that are less
certain to be recovered than probable reserves. There is at least a 10%
probability that the quantities actually recovered will be equal to or
exceed the sum of proved plus probable plus possible reserves. At
December 31, 2010 there were 5.8 million barrels of possible oil and
NGL reserves, 84.1 Bcf of possible natural gas reserves for a total of
19.9 million boe on an equivalent basis.
4) Reserve volumes, future net revenue and pre-tax present value of
future net revenue do not include undeveloped land or the value of
drilling opportunities in Argentina, Colombia or Peru.
5) Reserves are company working interest reserves before royalty.
6) Numbers have been rounded for presentation purposes.
Forward-Looking Information
This press release contains forward-looking information, including but not limited to estimated reserves and future net revenue associated therewith.. The information is based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of geological interpretations, the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with negotiating with foreign governments and risk associated with international activity. Additional risks and uncertainties are described in the company's Annual Information Form, which is filed on SEDAR at www.sedar.com.
The reserves and future net revenue in this press release represent estimates only. The reserves and future net revenue from the company's properties have been independently evaluated by GLJ with effective dates of December 31, 2010 and December 31, 2009, respectively. These evaluations include a number of assumptions relating to factors such as initial production rates, production decline rates, ultimate recovery of reserves, timing and amount of capital expenditures, marketability of production, future prices of crude oil and natural gas, operating costs, well abandonment and salvage values, royalties and other government levies that may be imposed during the producing life of the reserves. These assumptions were based on price forecasts prepared by GLJ for use as at the dates of these reports and many of these assumptions are subject to change and are beyond the control of the company. Details of these assumptions will be contained in the company's Annual Information Form for the year ended December 31, 2010. Actual production, sales and cash flows derived therefrom will vary from the evaluation and such variations could be material. The present value of estimated future net cash flows referred to herein should not be construed as the current market value of estimated crude oil, NGL's and natural gas reserves attributable to the company's properties. Actual future net revenue will be affected by factors such as the amount and timing of actual production, supply and demand for crude oil and natural gas, curtailments or increases in consumption by purchasers and changes in governmental regulations or taxation.
Due to the risks, uncertainties and assumptions inherent in forward-looking information, prospective investors in the company's securities should not place undue reliance on this forward-looking information. Forward looking information contained in this press release are made as of the date hereof and are subject to change. The company assumes no obligation to revise or update forward looking statements to reflect new circumstances, except as required by law.
Petrolifera Petroleum Limited
R. A. Gusella, Executive Chairman
(403) 538-6201
Or
Gary D. Wine, President and Chief Operating Officer
(403) 539-8450
Or
Kristen J. Bibby, Vice President Finance and Chief Financial Officer
(403) 539-8450
[email protected] www.petrolifera.ca