This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Petromagdalena Announces Farm Out Of Santa Cruz And US$10/bbl Improvement In Oil Marketing Agreement At Cubiro

TORONTO, Aug. 25, 2011 /PRNewswire/ - PetroMagdalena Energy Corp. (TSXV: PMD) announced today that it has signed a letter of intent to farm out 30% of the Santa Cruz Block, in which the Company holds a 100% working interest, for a carry of 60% of the first exploratory well to be drilled on the block and 45% of the second exploratory well. The Santa Cruz Block is located in the Catatumbo Basin in Colombia and neighbours the producing Rio Zulia field. The Company expects to have its environmental permit shortly and to commence drilling of the first exploratory well, estimated to cost approximately US$15 million, in the fourth quarter this year. PetroMagdalena will retain a 70% working interest in the block and remain as operator.

Commenting on the farm-out agreement, Luciano Biondi, the Company's Chief Executive Officer stated, "We are very pleased to announce this farm out agreement as it diversifies our exploration risk, maintains our upside opportunity from a new discovery and frees up approximately US$8-9 million of funding in this year's budget which had been allocated to Santa Cruz. Consistent with our strategic focus on our core oil assets, we will invest these funds in the expanded work program at Cubiro following the Petirojo discovery announced on Monday, including a development well and an exploration well in Cubiro Block B in addition to accelerating the workover candidates at Cubiro."

The Company also announced that it is continuing to take steps to improve the netbacks from its operations at Cubiro. Earlier this year, the Company announced that it had implemented an improved marketing contract with Pacific Rubiales Energy Corp. to deliver its oil from Cubiro through multiple delivery points to the existing Colombian pipeline infrastructure. Initially, oil deliveries were directed to the Rubiales field with the Company's selling price based on a formula that resulted in it receiving, on average, WTI minus $7/bbl. Commencing in July 2011, the Company is now delivering 100% of its oil under the marketing agreement with Pacific Rubiales to Guaduas due to the high quality of its oil from Cubiro, which is now sold as Vasconia, resulting in an improved selling price compared with WTI. Vasconia has increased against WTI over the past year and is actually selling today at US$19/bbl over WTI. The Company's oil sales for the month of July were equivalent to WTI plus US$10/bbl using Vasconia as the benchmark. This is a US$17/bbl improvement in oil selling price versus the previous arrangement. With transportation costs approximately US$7/bbl higher to deliver through Guaduas, the net improvement in the netback structure in the oil marketing agreement is approximately US$10/bbl. The Company continues to evaluate additional opportunities to improve its netbacks through price enhancement and cost reductions. 

PetroMagdalena is a Canadian-based oil and gas exploration and production company, with working interests in 19 properties in five basins in Colombia. Further information can be obtained by visiting our website at .

All monetary amounts in U.S. dollars unless otherwise stated. This news release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the business, operations and financial performance and condition of PetroMagdalena. Forward-looking statements and forward-looking information include, but are not limited to, statements with respect to estimated production and reserve life of the various oil and gas projects of PetroMagdalena; the estimation of oil and gas reserves; the realization of oil and gas reserve estimates; the timing and amount of estimated future production; costs of production; success of exploration activities; and currency exchange rate fluctuations. Except for statements of historical fact relating to the company, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan," "expect," "project," "intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of PetroMagdalena and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions, risks relating to international operations, fluctuating oil and gas prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses, labour disputes and other risks of the oil and gas industry, failure of plant, equipment or processes to operate as anticipated. Although PetroMagdalena has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. PetroMagdalena undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

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 news release.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.03 0.21%
FB $116.73 0.00%
GOOG $691.02 0.00%
TSLA $249.50 0.72%
YHOO $36.59 0.00%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs