CALGARY, March 11, 2014 /CNW/ - Petromanas Energy Inc. ("Petromanas" or the "Company") (TSXV: PMI) today provided an update on its drilling and testing activities on Blocks 2-3, in which it holds a 25% working interest and is the Operator with Shell holding the remaining 75% interest, and its discussions with the Albanian government with respect to the Blocks D-E Production Sharing Contract ("PSC"), in which the Company holds a 100% working interest.
The Molisht-1 well has been drilled to a depth of approximately 3,270 metres. The Company logged the upper carbonate zone and has run and cemented the intermediate casing to this depth. This casing point is below the Berati fault, which the Company believes caused stability issues during the drilling of the Shpirag-2 well. Once drilling resumes, Petromanas expects to drill the well to a total depth of approximately 5,500 metres.
Following the completion of a 30-day pressure build-up at Shpirag-2, the Company pulled data recorders from the hole and sent the acquired information for further analysis by a third party that specializes in the interpretation of well test data. Reservoir pressure extrapolated from the build-up indicates the reservoir is over-pressured, assuming an oil column of at least 800 m, as stated in a previous release. Given the relatively short three-day test, limited by on site tankage, production and pressures did not fully stabilize. Management believes that a longer flow test would be beneficial in estimating the long term productivity of the well. As a result of the instability issues experienced while drilling the Shpirag-2 well, open hole logs were not run as planned. The critical reservoir information from the logs would also benefit further analysis of the test data. Based on the positive oil rates, stable gas oil ratios and low H2S content measured during the three-day test and data obtained from the 2013 seismic program, plans are progressing for the Shpirag-3 well, which is expected to be located approximately three kilometers south of Shpirag-2 and to begin drilling immediately after the Molisht-1 well has reached total depth. The lease construction work has been tendered and the necessary long lead items have been ordered in preparation for drilling. The Company has submitted a phased appraisal plan for the Shpirag discovery to the Government of Albania. The appraisal plan contemplates drilling additional wells, planning additional seismic, continued fracture studies and the scoping of extended testing facilities.
"Based on the results from the pressure build-up analysis at Shpirag-2, we are seeing indications of many of the reservoir characteristics necessary to support deliverability and production from a deviated wellbore that would access the interconnected fracture network that we believe exists in the target carbonate reservoir," said Mr. Glenn McNamara, CEO of Petromanas. "With the positive data we have on the Shpirag-2 discovery and additional seismic becoming available on Blocks 2-3, near-term next steps include obtaining an updated resource report generated by an independent third party in Q2 2014 and completing the drilling and testing of Molisht-1 in Q3 2014."
The Company today also announced that the Albanian National Agency of Natural Resources ("AKBN") has communicated its intention to request payment from the Company's bank in the amount of US$5.4 million against the Company's US$6 million performance guarantee outlined in the PSC for Blocks D-E. AKBN will request this payment as compensation for the financial commitment that was not completed by Petromanas in the second exploration period.
Due to delays in receiving construction permits in 2012, Petromanas had requested an extension to complete its commitments for the second exploration period. In December 2012, the Albanian Ministry of Economy, Trade and Energy ("METE" or the "Ministry") approved the request for a one year extension and forwarded the revised PSC to the Albania Council of Ministers for ratification. This approval was eventually received on July 28, 2013, which made it impractical to source a rig and drill a well by the new deadline of December 25, 2013. Prior to receipt of this approval, the Company had requested a revision to the original request due to the ongoing delay in obtaining the extension approval. Given these events, and consistent with the terms of the PSC, the Company has submitted notice to AKBN requesting approval to enter into the third exploration period for Blocks D-E. The Company has further requested that the third exploration period would have a term of two years, as allowed in the PSC, commencing on the date of final government approval.
Petromanas has a 100% working interest in Blocks D-E totaling 259,650 gross acres. Blocks D-E are to the north of the Company's discovery on Blocks 2-3 and outside of the areas of existing production in the country. Management believes that Blocks D-E have a higher risk profile than Blocks 2-3.
About Petromanas Energy Inc.
Petromanas Energy Inc. is an international oil and gas company focused
on the exploration and development of its assets in Albania.
Petromanas, through its wholly-owned subsidiary, holds two Production
Sharing Contracts ("PSCs") with the Albanian government. Under the
terms of the PSCs, Petromanas has a 100% working interest in Blocks D
and E and a 25% working interest in Blocks 2-3 that comprise more than
1.1 million gross acres across Albania's Berati thrust belt. Petromanas
also holds exploration assets in France and Australia.
This press release contains forward-looking information within the meaning of applicable securities laws and is based on the expectations, estimates and projections of management of Petromanas as of the date of this news release unless otherwise stated. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this press release contains forward-looking information concerning the future performance of the Company, including but not limited to the drilling operations of the Molisht-1 well, the appraisal, assessment and commerciality of the Shpirag discovery, the preparations for and the drilling of the Shpirag-3 well, the results of an updated resource report regarding the Company's assets in Albania and the timing and results of the Company's request for approval to enter the third exploration period under the terms of the PSC governing Blocks D-E. In respect of the forward-looking information concerning the future performance of the Company, Petromanas has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the timing and drilling of wells and the Company's ability to meet its operational commitments, the ability of Petromanas to receive, in a timely manner, necessary regulatory and governmental operational approvals; and expectations and assumptions concerning, among other things: commodity prices and interest and foreign exchange rates; planned construction activities, capital efficiencies and cost-savings; applicable tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release.
Since forward-looking information addresses future events and conditions, by its very nature it involves 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 the risks associated with the industries in which Petromanas operates in general such as operational and exploration risks; delays or changes in plans with respect to growth projects or capital expenditures; delays in obtaining or the failure to obtain governmental approvals, permits or financing or political risks in the completion of development or construction activities; access to drilling rigs, completion equipment, seismic equipment and operational personnel; costs and expenses; political risks; risks of litigation; title disputes; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. There is a specific risk that the Company may be unable to complete the drilling, completion and testing of the Molisht-1 well in the manner described in this press release or at all. If the Company is unable to drill, complete and test the Molisht-1 well at costs estimated and in the manner described in this press release or at all there could be a material adverse impact on the Company and on the value of the Company's securities. There is a specific risk that the appraisal of the Shpirag-2 discovery will not provide results which support commercial development of the Shpirag discovery. If the appraisal program at Shpirag-2 does not support commercial development of the discovery, there could be a material adverse impact on the Company and on the value of the Company's securities. If the Company's request to enter the third exploration phase under the terms of the PSC governing Blocks D-E is not approved then there is a specific risk that the Company may be required to relinquish Blocks D-E.
Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of Petromanas are included in reports on file with applicable securities regulatory authorities, including but not limited to; Petromanas' Annual Information Form for the year ended December 31, 2012 which may be accessed on Petromanas' SEDAR profile at www.sedar.com.
The forward-looking information contained in this press release is made as of the date hereof and Petromanas 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.
Neither 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 release.
SOURCE Petromanas Energy Inc.
Glenn McNamara, CEO
Bill Cummins, CFO
Petromanas Energy Inc.
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