Operations Update

RNS Number : 6809C

PetroTal Corp.

19 June 2019

 

PetroTal Corp Provides Operations Update

PetroTal brings third Bretaña oilwell, BN 95-3D, online;

Total field production rises to over 5,000 bopd

Calgary and Houston - June 18, 2019-PetroTal Corp ("PetroTal" or the "Company") (TSX-V: TAL and AIM: PTAL) is pleased to announce the third oil well in the Bretaña field is online, bringing total field current production to over 5,000 barrels of oil per day ("BOPD").

HIGHLIGHTS

·    BN 95-3D well had initial production of 3,500 BOPD

·    Full field Bretaña production is now over 5,000 BOPD, in line with guidance

·    Deviated completion to optimize cash flow, with option to sidetrack horizontally in 2020

·    BN 95-3D is Company's first well completed with an electric submersible pump

·    BN 95-3D expected to come in under budget

·    Company will immediately begin drilling BN 95-2WD water disposal well

·    Following the 2WD, recompletion of the existing water disposal well as an oil producer will commence

The Company's third oil well, which reached total depth in early June, was completed as an oil producer in the Vivian formation in the northern portion of the Bretaña structure.  The well was brought online at an initial rate of approximately 3,500 BOPD. This is an early production rate and more detailed production data will be announced in due course.  The well has an electric submersible pump ("ESP") that will optimize future well productivity. The well, which originally scheduled to be completed horizontally, was brought online through a deviated completion.  While drilling the section above the target Vivian formation, the service provider's directional drilling tools, needed to drill the horizontal section, had a mechanical failure that resulted in the need to sidetrack the well and complete it directionally. Even with the sidetrack, the well is expected to come in under the estimated US$13 million pre-drill budget.

The Company will now move forward to drill the BN 95-2WD, a water disposal well.  The Company's water wells are expected to be able to handle reinjection rates of 30,000 barrels of water per day.  Following the 2WD water injection well, management intends to undertake a workover of the existing 1WD water disposal well and complete it as an oil producer;  the current 1WD water disposal well, drilled by the previous operator, was completed with limitations on injection capacity, and was drilled at the crest of the structure making it a candidate to become an oil producer.  Estimated cost of the workover of this well is $2 million, and management believes this is the most effective use of capital.  If successful, payout of the well could be faster than any other oil well in the field. The Company's future water wells will be drilled on the flanks of the field to optimize production. 

Production from the Bretaña field, currently restricted to between 5,000 and 6,000 BOPD with existing processing facilities, is now over 5,000 BOPD, consistent with management's projections. The Company's second oil producer the 2XD, is producing at 2,400 BOPD, slightly ahead of rates announced at the end of May 2019.  The two wells drilled by the Company, the 2XD and 3D, are supplying the field's oil capacity, and the 1XD discovery well, drilled by a previous operator, has been shut in to manage constraints in the field. The drilling and recompletion work addressed above are designed to ready the field for production to increase up to 10,000 BOPD later in the year, once phase two of oil processing equipment is installed and commissioned, and the BN 95-4H well (the next new well in the campaign) is drilled and completed. 

Manolo Zuniga, President and Chief Executive Officer, commented:

"The mid-year objective of reaching total field production of over 5,000 BOPD is yet another key milestone that has been reached by the team.  The BN 95-3D well came online at impressive rates, and although in its early days, is producing 3,500 BOPD.  The team made a decision to complete the well vertically and deliver key cash flow, knowing that we can sidetrack the well into a horizontal completion at a later date, likely in 2020. We will now drill a water disposal well that will allow us to follow that work with a recompletion of the existing water well, turning it into an oil producer.  The reservoir team believes the productive sands in the water well are as good, if not better, than the wells drilled to date.  Our water disposal wells will be drilled on the flanks of the field rather than at the crest, where logs of the Vivian formation in the existing water disposal well look impressive."

For further information, please contact:

Greg Smith

Executive Vice President and Chief Financial Officer

[e-mail]

T: [phone]

Manolo Zuniga

President and Chief Executive Officer

[e-mail]

T: [phone] Mark Antelme / Jimmy Lea Celicourt Communications (Financial PR) [e-mail] T: 44 (0) 207 520 9261 James Spinney / Ritchie Balmer / Eric Allan Strand Hanson Limited (Nominated & Financial Adviser) T: 44 (0) 207 409 3494 John Prior / Emily Morris / George Price Numis Securities Limited (Joint Broker) T: [phone] Jonathan Wright / Hugh R. Sanderson GMP FirstEnergy (Joint Broker) T: [phone]

READER ADVISORIES 

FORWARD-LOOKING STATEMENTS: This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to: PetroTal's business strategy, objectives, strength and focus; drilling, completion, and workover activities of oil producing and water disposal wells and the results and timing of such activities; the ability of the Company to achieve drilling success consistent with management's expectations; anticipated future production, revenue and cash flow; exit production in 2019; and future development and growth prospects. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "estimate", "potential", "will", "should", "continue", "may", "objective" and similar expressions. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the ability of existing infrastructure to deliver production and the anticipated capital expenditures associated therewith, reservoir characteristics, recovery factor, exploration upside, prevailing commodity prices and the actual prices received for PetroTal's products, the availability and performance of drilling rigs, facilities, pipelines, other oilfield services and skilled labour, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the accuracy of PetroTal's geological interpretation of its drilling and land opportunities, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of new wells, the Company's growth strategy, general economic conditions and availability of required equipment and services. Although the Company 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 the Company 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. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (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 estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), commodity price and exchange rate fluctuations, legal, political and economic instability in Peru, access to transportation routes and markets for the Company's production, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Please refer to the risk factors identified in the Company's annual information form for the year ended December 31, 2018 and management's discussion and analysis for the three months ended March 31, 2019 which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

OIL AND GAS INFORMATION: References in this press release to production test rates, initial test production rates, and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for PetroTal. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary.

FOFI DISCLOSURE: This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about PetroTal's prospective results of operations, production, payout, cash flow, budget and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about PetroTal's anticipated future business operations. PetroTal disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein. All FOFI contained in this press release complies with the requirements of Canadian securities legislation, including Canadian Securities Administrators' National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

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 press release.

 

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