Petroamerica (PTA:TSXV) announced exciting news just after market today with two new oil discoveries made in Colombia. The discoveries were made on the El Eden block (40% working interest with PXT 60% operated interest) in the prolific Llanos Basin of Colombia. At their La Casona 2 well the companies discovered 545 barrels of light 47 degree API oil and 3.6MMscf of gas in the Mirador formation. They also discover 15.5 degree API oil in the Une Formation at their Rumi-1 well (also on the El Eden Block) which tested up to 1,274bopd under natural flow conditions. These two wells represent new oil discoveries for Petroamerica and gives them an exciting new oil play. The company also announced their La Guira-2 well has reached its target depth of 12,600 feet and is being logged.
La Casona-2 was tested for a 7-day period from a 12-foot perforated interval on a restricted choke and tested at an average rate of 545bopd with peak rates reaching 740bopd. A total of 3,903 barrels of 47 degree API oil was recovered from the test.
The Rumi-1 well was drilled to a total depth of 14,620 feet and encountered a 60 feet hydrocarbon column in the Une Formation of which 27 feet is interpreted as net oil pay distributed over four separate sands. When all four sands were tested together, they flow tested at rates of approximately 1,000bopd for the first 20 hours. Over the full 30 hour test, rates averaged 762bopd with peak rates reaching 1,274bopd. The water-cut at the end of the test was high at 32%. The company plans to complete the well with an electo-submersible pump and place on long-term test.
Petroamerica ended 2013 with average daily production of 5,440boe/d (5,433bopd and 14.9 MMscf of gas) which represents 21% above guidance (roughly 940bopd above guidance) and a substantial 390% increase over 2012 average production of 1,392bopd. They averaged well above that in the fourth quarter with 6,414boe/d of production of which 6,328 barrels were oil.
The company is targeting 5,000 to 5,500boe/d of production this year, but that is probably pessimistic due to the fact this estimate does not include the two discoveries announced today nor any exploration success this year (very likely). Their 2014 production guidance is based on Las Maracas, Balay, La Casona-1 and Cuiara-1.
Petroamerica also gave an update on their 2014 capital program which they are estimating roughly $70 million for exploration and development in the Llanos Basin. $49 million of that is budgeted for exploration, $5 million for appraisal and long-term testing and $16 million is for development activities.
In 2014, Petroamerica and their operating partners plan on being active on their Colombian blocks with a number of wells already firmly planned. These include:
- La Guira-2 well in Q1
- Crypto-1 well Q2
- Malavar-1 well Q3
- Los Ocarros-X-1 Q3
They expect this capital program to be funded through existing cash as well as operating cash flows from current production. With +$70 operating netbacks, the company is making nearly $500,000 per day in operating cash flows (given 6,400boe/d production levels from fourth quarter 2013).
The company has secured ICE Brent $95 puts for 5,000bopd of production for the first quarter of 2014.
We own PTA. This is an opinion and not investment advice. Due your own due diligence.