PXT/PTA – Parex and Petroamerica Provide Update From Colombia and Announce Production from La Casona

POSTED ON December 11, 2013 BY Travis McPherson
CATEGORY Colombia, Energy, Finance, Oil and Gas, Petroamerica Oil, South America,

Parex expects to produce over 17,000bopd in the month of December and exit 2013 at 16,800bopd (Photo: David Jones/Getty)

Parex and Petroamerica have started up production at the La Casona well (Photo: David Jones/Getty)

Parex Resources (PXT:TSX) and Petroamerica Oil (PTA:TSXV) have provided an update on the exploration and development work going on in some of Colombia's most prolific light oil fields. Parex is excited about the developments on the El Eden block (60% operated working interest, Petroamerica 40% working interest) as they have begun long-term production from the test facility which includes gas compression and sales. The companies will be producing from the Une formation and is currently producing at restricted rates of 350 bopd and 1.5 million standard cubic feet per day. The La Casona-2 well which was drilled 600m from La Casona-1 will begin testing the Mirador formation by year-end. La Casona diversifies Petroamerica's production profile which should be viewed as positive as La Casona also offers further development potential.

Parex also announced that the Tigana-1 and Tigana Sur-1 exploration wells have both been cased and both encountered potential oil pay in the Mirador and Guadalupe formations in the southern LLA-34 block (45% non-operated working interest). On December 6th, an electric submersible pump (ESP) was installed in the Tigana-1 well to allow for continuous production testing which, after 55 hours, was producing 1,600bopd with a 0.8% water cut. This well will continue short-term production testing in the Guadalupe reservoir. The service rig has now been moved 1,200m south to the Tigana Sur-1 well to perform production testing in the Guadalupe formation.

Parex expects production from the Tigana and La Casona wells to maintain north of 17,000bopd of production through year-end. The company averaged 17,000bopd in the month of November and maintains its 2013 exit rate guidance of 16,800bopd.

Petroamerica is expecting average production in 2013 to be 5,000bopd which could be exceeded with the success the company has had over the last quarter. They will be announcing their 2014 capital budget and production guidance in the next few weeks. In January they were producing roughly 4,000 bopd and in 2013 they spent $80 million to discover multiple new fields and to achieve current production of over 6,000bopd.

The Rumi-1 well reached its target depth of 14,620 feet and is being cased. The wireline logs indicate a gross hydrocarbon column of 60 feet in the Une formation of which 27 feet is interpreted as net oil pay which is very encouraging for this formation. This represents a potential new oil discovery and one that could be material to Petroamerica. Rumi is located on the El Eden block which Parex holds a 60% operated working interest with Petroamerica holding the remaining 40%.

On the highly productive Los Ocarros block (50% operated working interest, Petroamerica 50% working interest) which hosts the Las Maracas wells, the company has decided to suspend the La Guira-1 well due to a high water cut encountered in the well even after an ESP was installed.

Pacific Rubiales is an active acquirer in the light oil space in Colombia (Credit: Reuters/Jose Miguel Gomez)

In late November, Parex announced they would be targeting 17,500-18,500bopd average production over 2014. They would be spending approximately $250 million next year in order to achieve that. Parex remains a strong takeover candidate in the light oil space in Colombia. With many productive wells across some of the most attractive light oil fields in Colombia, the company would be a favorite among heavy oil producers such as Pacific Rubiales, looking for cheaper diluent for their heavy crude production. If Parex goes, then you are likely to see their Los Ocarros and El Eden block partners, Petroamerica get bought as well as they currently trade very cheaply relative to their peers in Colombia.

Petroamerica should continue to have lots of news flow going into 2014. With these latest developments, the company is further derisked and clearly firing on all cylinders. The Rumi-1 discovery could prove to be a material development for the company. Watch for 2014 guidance and the testing of the La Casona-2 well as well as further developments at Rumi. Management also expects to spud La Guira-2 and Crypto-1 early in 2014.

Read: Parex Resources Provides Operational Update Highlighted by the Tigana Discovery and Record Production (Wall Street Journal)

Read: Petroamerica Announces La Casona-1 Production Start-Up and Cases the Rumi-1 Exploration Well For Testing (Wall Street Journal)

Travis McPherson

trav@ceo.ca

Travis McPherson

trav@ceo.ca

Disclaimer:

Readers are advised that the material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein, and may change their positions without notice. (Any significant positions will be disclosed explicitly. This article is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be — either implied or otherwise — investment advice. Thomas Humphreys, Pacific Website Company Inc., and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. We reserve the right to buy and sell such securities or commodities without notice to readers. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. The information herein may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. Neither Thomas Humphreys, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in these publications or web site.

Forward-Looking Statements: This article may include certain "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking statements include predictions, projections and forecasts and are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "forecast", "expect", "potential", "project", "target", "schedule", budget" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions and includes the negatives thereof. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the potential of the Company's properties are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are based on a number of material factors and assumptions. Important factors that could cause actual results to differ materially from Company's expectations include actual exploration results, changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, uninsured risks, regulatory changes, delays or inability to receive required approvals, and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ from those described in forward-looking statements, there may be other factors that cause such actions, events or results to differ materially from those anticipated. There can be no assurance that forward-looking statements will prove to be accurate and accordingly readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date of this article. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Always do your own due diligence. We seek safe harbor.