PTA – Light Oil Discovery At La Guira And Two New Wells Coming On Production For Petroamerica

POSTED ON November 13, 2013 BY Travis McPherson
CATEGORY Colombia, Energy, Oil and Gas, Petroamerica Oil,

PTA is averaging over 6,300bpd

Parex Resources (PXT:TSX), the 50% operating partner of Petroamerica Oil (PTA:TSXV) in the Los Ocarros Block in Colombia's Llanos Basin, announced the initial results from the La Guira-1 exploration well, in their third quarter release (and subsequently in a release from PTA). La Guira-1 was spud on October 9th and targeted the Mirador, Gacheta and Une formations and was drilled to a total depth of 12,500 feet. La Guira-1 hit 11 feet of net oil pay in the Mirador formation. The well was tested over a 24.5 hour period and during the first hour was flowing at over 1,000 barrels of light 37.5-degree API oil with a 20% water cut under natural flow conditions. As testing continued, the water cut increased to over 50% and the well ceased flowing naturally.

A total of 206 barrels of oil were recovered from the test. The Gacheta formation was flow tested, but did not produce commercial amounts of oil. PTA will now run a electrosubmersible pump into the well and will tie the well into the Las Maracas central production facility which is located 7km away. They should be able to commence long-term production tests soon given how close the Las Maracas production facilities are to this latest discovery.

La Guira located on the Los Ocarros Block

PTA has announced plans to drill an updip appraisal well, La Guira-2, due to management's interpretation of the La Guira-1 discovery well being low in the La Guira structure. As a result, they need to gain more vertical height above the Mirador oil-water contact and intersect the Gacheta reservoir. This is an exciting discovery and although the well itself was somewhat disappointing due to the water cut, the fact the company has made a new light oil discovery is promising. As with many Colombian light oil wells, the initial watercut will likely be manageable once longer-term testing is done.

PTA has also updated shareholders on the La Casona-2 appraisal well located on the El Eden block (40% non-operated working interest, PXT is the 60% operator). The well has been drilled and a workover rig is going to test the Mirador formation there given that the Mirador, which is typically highly productive, was untested in the original La Casona-1 well. The company expects the workover rig to be onsite within the next 2 weeks. La Casona-1 production is expected to start during the next week. Commissioning of the long-term test production facility for the La Casona-1 well is now complete.

The company's other well on the El Eden block, Rumi-1 was spudded on November 6, 2013 and is currently at a depth of 5,000 feet and will target the Mirador, Gacheta and Une formations with results expected by mid-December.

The company is flowing at over 6,300bpd and is still targeting 10,000bpd by this time next year. Successful watercut management with further success on the La Guira discovery as well as strong production from La Casona will help get them to that benchmark. Combine that with their stellar production at Las Maracas and the company looks set to deliver strong production growth over 2014.

Pacific Rubiales is actively acquiring light oil assets in Colombia

It will be a busy year-end for important newsflow. Watch for the results from La Guira-2 as well as the production from La Casona-1 and the Rumi-1 initial flow rates which are expected by mid-December. With recent M&A activity picking up in Colombia's light oil fields also, PTA looks like a prime takeover candidate, especially given their current valuations; trading at an enterprise value of $26,500 per flowing barrel of oil. Petrominerales (PMG:TSX) is being purchased by Pacific Rubiales (PRE:TSX) at almost double that value ($46,990 per flowing barrel).

Read: Petroamerica Tests Light Oil at La Guira-1 and Provides an Operations Update for its Activities in Colombia

Travis McPherson

trav@ceo.ca

Travis McPherson

trav@ceo.ca

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