Petrominerales Plans Expanded 2010 Drilling Campaign

Published: 29-Nov-2009

Petrominerales Ltd. (Petrominerales) has announced an expanded drilling program for 2010. The program will build on the company's 2009 exploration successes and will be fueled by cash flows from its growing production base and industry leading operating netbacks. The Percheron-1 well, the company's first exploration well on the Guatiquia block, commenced drilling on September 30, 2009 and reached a total depth of 12,198 feet on October 27, 2009.

Well logs indicated 51 feet of potential net oil pay in the Lower Sand 1 zone and 25 feet of potential net pay in the Lower Sand 3. The well has been cased as a potential oil well and Petrominerales is currently conducting a multi-zone testing program. Multiple testing of the Lower Sand 3 zones did not yield commercial hydrocarbons. Final test results are expected by year-end. The Guatiquia Block, covering 26,349 acres, is on trend and contiguous with the southwest portion of the Corcel Block.

Candelilla-1, Petrominerales' second exploration well on the Guatiquia Block, commenced drilling on November 9, 2009 and has reached intermediate casing point at 11,155 feet measured depth. Targeted depth is 12,285 feet. After drilling Candelilla-1, the company plans to move the rig back to Corcel to continue Petrominerales' multi-year drilling program, starting with Corcel-C2.

Corcel Block and Blocks 25 & 31

At Corcel, the company plans to have two drilling rigs operating on the block for the majority of 2010 to drill 14 wells through the end of the year. The first rig will initially focus on the central portion of the block, where the company will drill six locations in 2010, including its first horizontal well at Boa-2, follow-up locations on the Corcel C, E and A structures, the first well on the G structure, and a well (Corcel T) targeting another new geological concept. The second rig will commence drilling new prospects identified from the company's 2008 Corcel northeast 3D seismic program. The first well will be the Amarillo prospect, which is expected to spud in late February 2010.

Petrominerales is planning to make investments in facilities at Corcel that include expanded fluid handling capacity, water injection capability and optimization of the power facilities. The next expansion of Petrominerales' Corcel central processing facility will be sized for 180,000 barrels of fluid handling capacity per day. Once completed, it is expected that the optimization of the power infrastructure will reduce the company's power-related operating costs.

The final phase of the company's Monterrey offloading facility remains on-schedule for completion by year-end. In 2010, Petrominerales has priority to deliver up to 20,000 barrels of oil per day (bopd) to the facility. Monterrey is the closest offloading station to Corcel, 77 kilometers away, and has allowed Petrominerales reduced its trucking costs for volumes delivered to this station to under $3.00 per barrel.

Blocks 25 and 31 are two contiguous blocks north of Corcel and on trend with the Cusiana-Cupiagua fields. In October 2009, Petrominerales initiated its 354 square kilometer 3D seismic acquisition program that will give the company 3D seismic coverage over the entire Corcel Block and the adjacent, contiguous portion of Block 31. The company's first exploratory wells on Block 31 are targeted for 2011. On Block 25, the company has identified three prospects from reprocessing and interpretation of the existing 2D seismic database. In 2010 Petrominerales plans to select its first exploration well location and expect to commence drilling operations early in 2011.

Llanos Plains (Casanare Este, Casimena, Castor, Mapache)

Petrominerales has contracted an additional drilling rig for the Llanos Plains area where it plans to drill up to 13 exploration wells in 2010. The company's plan to drill one exploration well on each of the Casanare Este, Casimena, and Castor blocks. These wells will satisfy contractual exploration commitments. At Mapache, Petrominerales is planning to drill 10 prospects identified from its 2009 3D seismic program. Applying a strategy similar to its successful operation at Corcel, Petrominerales has positioned itself to commence commercial production immediately following exploration success at Mapache.

Heavy Oil Blocks (Rio Ariari, Chiguiro Este, Chiguiro Oeste)

Petrominerales has a large, 818,650 acre land position in the southern Llanos basin that consists of three blocks. At Rio Ariari, the company's first exploration well on the block, Rio Ariari-1, was drilled to a depth of 4,860 feet on November 7, 2009. During the drilling operations, the company conducted an open-hole test in the Upper Mirador formation where it encountered 16 degree API oil to surface. Testing of lower intervals in the well did not yield commercial hydrocarbons. During the initial production test over lower portion of the Upper Mirador formation, the company has tested 10 degree API oil at a rate of 69 bopd over a 60-hour period from eight feet of perforations. The well is now shut in for a pressure build-up test which will help determine the potential productivity of the zone. Going forward, Petrominerales plans to perforate and test 14 feet of the upper portion of the Upper Mirador and determine additional testing requirements based on evaluation of the data. The company expects to have final results by mid-December 2009. Following the testing program, Petrominerales is planning to drill a step-out location to further define the Rio Ariari-1 prospect. To-date, Petrominerales has identified 13 prospects and leads on the block and plan to drill two additional exploration wells in 2010.

At Chiguiro Este, the company is planning a 78 square kilometer 3D seismic program to define a new play concept on the block. At Chiguiro Oeste, Petrominerales plans to complete its testing program on the Chiguiro Oeste-1 well and drill one exploration well in 2010. These activities will satisfy exploration commitments on each of the blocks.

Neiva

On its Neiva block, Petrominerales plans to drill up to 37 wells (15 targeting the Doima Chicoral zone and 22 focused on the Honda formation) and complete 21 workovers in 2010. To date in 2009, the company has drilled 32 wells, 17 in the Doima Chicoral and 15 in the Honda formation.

Peru

Petrominerales has a 55% interest in the 2.6 million acre Block 126 in the Ucayali Basin of Peru. With its joint venture partner, the company has commenced the acquisition of 150 square kilometers of 3D seismic and 50 kilometers of 2D seismic, which is likely to be completed early in 2010. Initial activities on the block included the reinterpretation of 1,200 kilometres of 2D seismic, which has confirmed a large structural feature, the La Colpa structure, originally tested by a well drilled on the block 20 years ago. Two other structural leads have also been identified from the existing reprocessed 2D seismic. In 2010, Petrominerales plans to process and interpret the 3D seismic and complete civil works so that it will be in a position to begin drilling operations on its first exploration well on the block in early 2011.

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