CALGARY, ALBERTA--(Marketwired - Oct. 23, 2013) - Platino Energy Corp. ("Platino" or the "Company") (TSX VENTURE:PZE) reports a light oil discovery on the Coati Block in the Putumayo Basin of Colombia and provides a financial update.
Coati Block Discovery
The Coati-1 well was cased to a total depth of 10,800 feet in late July with initial testing finishing September 23, 2013. Hydrocarbon shows and log pay were encountered in six prospective reservoir units and Platino has tested light oil from three of these reservoir zones.
Platino performed extensive drill-stem tests ("DST's") and short-term production tests in the Caballos Formation ("Caballos"), the principal pre-drill reservoir target, and DST's only in both the Villeta U Sandstone ("Villeta U") and Caliza A Limestone ("Caliza A"). Three additional reservoir targets, the Villeta T Sandstone ("Villeta T"), the Villeta N Sandstone and the Caliza B Limestone were identified as hydrocarbon bearing from well-logs and drilling shows but were not tested due to timing and cost constraints.
The presence of a 56 foot gross oil column and production test results from the Caballos at Coati-1 confirms the Company's pre-drill interpretation of a significant, hydrodynamically trapped oil accumulation. The Company encountered 42 feet of net pay in the Caballos, which is divided into two main reservoir units; a 22 foot thick glauconitic Upper Caballos sandstone and a thick Lower Caballos sandstone with 20 feet of net pay and a clear oil-water contact. Average log porosity in both zones is 12%. The two reservoir units are separated by a 14 foot sealing mudstone. The production tests conducted in the Caballos are summarized below:
|Caballos Production Test Results(1)
- Test results completed using artificial lift (jet pump).
Due to issues with cement integrity behind the five inch liner in the Caballos reservoir zones, water production on DST and on short-term tests was significantly higher than expected. Vertical interference tests confirm that the issue is a result of a lack of behind-pipe isolation. The well is currently shut-in pending receipt of official approvals to begin long-term testing. The Company is currently evaluating options to fix the cement in order to minimize produced water and maximize the oil production rate during long-term testing.
Villeta U Sandstone
The Villeta U has 10 feet of net pay in Coati-1. At the level of the Villeta U (and similarly the Villeta T), the Coati-1 well is part of a large anticlinal accumulation and is connected to two previously tested wells, Temblon-1V and Temblon-1X. Given the production history of these older wells (steady decrease in reservoir pressure with time) the Company believes a pressure maintenance scheme is required in order to deliver economic production from the Villeta U in Coati-1. The Company is initiating a project to evaluate options to deliver sustainable commercial flows from both the Villeta U and the Villeta T, which share similar reservoir characteristics. The DST results are summarized below:
Note: DST completed using mechanical lift (swabbing). Where multiple tests performed, only results of the final test are shown.
Caliza A Limestone
The Caliza A is a 140 foot thick lime mudstone with a fractured thickness of 55 feet. Continual live oil and wet gas shows were encountered throughout the unit while drilling despite using 12.5 pounds per gallon mud to control overpressure conditions. The unit was both acidized and hydraulically fractured, followed by DST's over multiple intervals using a jet pump. The test results indicate that these stimulation treatments in this vertical wellbore were unsuccessful in connecting the artificial hydraulically-generated fractures into the existing fracture network. Management believes the well results suggest that the Caliza A contains a potentially large resource which could be exploited by drilling of horizontal wells and completed using multistage hydraulic fracture treatments.
Independent of the well remediation work and pending long-term test approvals at Coati-1, the Company has begun the licensing process to drill additional locations across the Coati-Temblon field and acquire 3D seismic across the accumulation. Future drilling and seismic activity will be subject to the Company's evaluation of the commerciality of the well based on long-term test results in the Caballos.
As previously reported, the Nasua prospect, a conventional anticlinal structural target located 10 kilometers to the Northwest of the Coati-1 well, has been partially de-risked by the results at Coati-1 due to the verification of the hydrodynamic trapping model in the Caballos, the principal reservoir target at Nasua. The Company is currently contemplating drilling Nasua-1 without additional seismic and is actively licensing the area around Nasua-1 for drilling with the expectation of drilling the structure in late 2014, subject to issuance of environmental permits.
Platino currently holds a 100% working interest in the Coati Block, with such interest expected to be reduced to 80% once its partner, Canacol Energy Ltd. ("Canacol"), earns a 20% interest pursuant to agreed farm-in terms and subject to Agencia Nacional de Hidrocarburos ("ANH") approval. Platino's interest in the Coati Block is a result of the spin-off of certain exploration assets formerly belonging to C&C Energia Ltd. to Platino. The ANH has been informed of the spin-off and is currently reviewing.
2013 Capital Outlook and Financial Liquidity
As a result of licensing delays at the Putumayo-8 block and the conversion of the Company's working interest in the Morpho block to a royalty, the Company expects capital spending to be limited to the Coati block for the remainder of 2013. A summary of estimated spending for the remainder of 2013 is presented below. Based on current cash and cash equivalents (including short-term investments) and activities projected for the remainder of 2013, and assuming no further unbudgeted expenses or payment obligations, the Company estimates it will exit 2013 with approximately US$55 million (or US$0.80 per undiluted common share) in available funds.
|Civil & HSEC
|Completion & initial testing
|Total Capital Investments
|General and administrative(2)
- Includes acquisition related costs of approximately $0.2 million.
About Platino Energy
Platino is a Calgary, Alberta headquartered resource company engaged in the exploration for, and the acquisition, development and production of hydrocarbons in Colombia.
For further information please refer to Platino's website at www.platinoenergy.com.
Advisory Regarding Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable securities laws. The use of any of the words "will", "plans", "expects", "estimates", "believes" and similar expressions is intended to identify forward-looking information concerning the Company's future operations and performance, including the future exploration, maintenance and drilling plans for the Coati Block and the timing thereof; the potential for commercial production of oil from the Company's Coati Block, including from the Caliza A; the plans with respect to the drilling of the Nasua-1 well; the Company's outlook with respect to operating costs through the end of 2013; the Company's expected cash position at the end of 2013; and the operatorship of the Coati Block.
The forward-looking information in this news release is based on certain key expectations and assumptions made by Platino, including assumptions as to: the timing and progress of work relating to Platino's Coati-1 well and the Coati Block; Platino's geological and engineering estimates; taxes; the geography of the areas in which Platino will conduct exploration and development activities; assumptions regarding operating costs of the Company through the end of 2013; assumptions that no other significant unbudgeted costs will arise affecting the Company's year-end cash position; assumptions that no further common shares will be issued in 2013; the sufficiency of budgeted capital expenditures in carrying out planned activities; the accuracy of testing results and seismic data; the receipt of regulatory approval for the transfer of operatorship of the Coati Block; the ability of Canacol to earn its 20% interest in the Coati Block pursuant to agreed farm-in terms; and the accuracy of resource estimates and the general continuance of current or, where applicable, assumed operational, regulatory and industry conditions. Although Platino believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Platino can give no assurance that it will prove to be correct.
The forward-looking information in this news release is subject to known and unknown risks and uncertainties and other factors which may cause actual results to differ materially from those expressed or implied in the forward-looking information. Such risks, uncertainties and factors include, among others: risks that the Company will face unbudgeted expenses or payment obligations that would affect its year-end cash position; risks that the Company will have more common shares outstanding at the end of 2013 affecting the per share cash position of the Company at year end; the inability to secure necessary regulatory or other third party approvals; the nature of the exploration and development activities on Platino's assets; risks that actual operating and capital costs will be greater than expected; risks as to the ability of the Company's industry partners to satisfy their obligations under their agreements with the Company; and risks related to the ability of the Company to adequately repair the cement job of the Coati-1 well in the Caballos formation, as well as other difficulties encountered during the exploration for, delineation, development and production of oil. As a result of the foregoing, readers should not place undue reliance on the forward-looking information contained in this news release. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Platino are included in the Listing Application (Form 2B) of Platino filed with the TSXV, which has been filed with applicable securities regulatory authorities and may be accessed through the SEDAR website www.sedar.com.
The forward-looking information contained in this news release is made as of the date hereof and Platino undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
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