Amerisur Resources Plc: Reserves and Resources Update

Source Press Release
Company Amerisur Resources Plc 
Tags Reserve Update, Upstream Activities
Date April 01, 2015

Amerisur Resources Plc ("Amerisur" or the "Company"), the oil and gas producer and explorer focused on South America (LSE: AMER), announces an update to the certified reserves and resources for its exploration and production assets in Colombia and Paraguay.

Following receipt of an independent reserves report for the Platanillo field as at 31 December 2014 undertaken by Petrotech Engineering Ltd, using the standards set by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers, certified 1P (Proven) gross field reserves were 16.2 million barrels of oil ("MMBO") (2013: 19.8 MMBO) after production of 2.278 MMBO during 2014 and 2P (Proven and Probable) gross field reserves were 24.55 MMBO (2013: 32.8 MMBO).

Production during 2014 was 2.278 MMBO; hence current 1P reserves represent an effective 6% reduction from year end 2013. This technical reduction of the Expected Ultimate Recovery ("EUR") (a forward looking model which assumes a decline factor and projects the volume of oil which will ultimately be recovered) for current producing wells and for all future planned wells is a conservative view based upon several factors, including the relatively poor initial production result of wells Platanillo-15 and Platanillo-16, which served to reset the future average expected initial production rates. Additionally, the shut-ins of producing wells due to social and export issues during the year resulted in lower average production rates which also caused an increase in the future projected decline rate, resulting in lower overall volumes being recovered in the model through time. Reserves have also been impacted by the Board's responsible decision to reduce drilling activity in order to ensure capex at Amerisur is matched by cash flows in the current lower oil price environment, since some planned wells will not be delivered within the previous timeframe. Additionally there have been no significant reserves additions for either the T sand or the N sand since currently there are no development operations planned for those horizons over the next 12 months, even though the N sand has now been successfully tested in wells Platanillo-2 and Platanillo-18 and the T sand is under successful Long Term Test in well Platanillo-20. The technical reduction this year is owed to certain factors which, once full production can be re-established and stabilised with the entry of the export flow line later this year, can be recovered within the reserves model.

It is important to note that the encouraging porosity and permeability data indicated by the initial core analysis of Platanillo-20, which are likely to have a positive impact on overall field recovery rates, have not been fully incorporated in this 2014 reserves evaluation since the detailed analysis of the several reservoir horizons is still ongoing. The results of this Special Core Analysis ("SCAL") will be available in June of this year and is expected to have a positive impact on future EUR evaluations through an increase in oil originally in place and the estimated recovery factor. This analysis will be refined and validated with the static and dynamic reservoir models currently under construction using field production data and the core results from Platanillo-20.

In summary, the volumetric parameters of the several reservoirs in the Platanillo field have not changed; in fact the Company believes that recoverable volumes will in fact be higher than those previously certified, due to the improved reservoir properties seen in the Platanillo-20 cores.

In terms of Prospective Resources in the Platanillo field, currently estimated at 44.7 MMBO, the Company has taken a conservative view of potential recoveries while including a component relating to the structures seen in the far north of the block on existing 2D seismic. That model will naturally be refined and incorporated into the larger 3D cube once the northern 3D data is processed in the next months.

The Company continues to advance with the Ecuador interconnector project. Following the signing of the Letter of Intent with PetroAmazonas on 2nd February, the definitive agreement for the construction and operation of the flow line and transport of Amerisur production is under review by PetroAmazonas. Additionally, the structures of agreements with PetroEcuador for onward transport of Amerisur crude from Lago Agrio to Esmeraldas are advancing satisfactorily. The crisis of the oil price fall has been felt in all producing nations and Ecuador has not been immune to its effects, and a fundamental review of all aspects of the industry economics in Ecuador is underway at Government and National Oil Company levels, with the objective of maximising efficient production. The Company is convinced that the Amerisur interconnector project adds significant value to that objective and as such will benefit from the review process. Taking into account the current situation the Company expects to start construction upon completion of the Ecuadorian government review, presently anticipated later this year.

In the Fenix field, given the lack of a planned development programme in the next 12 months, the reserves have been reassigned to the Contingent Resources category.

In Putumayo 12, the gross P50 Prospective Resources estimated by the Company remain the same, at 305 MMBO. Having completed the required social consultations with Indigenous groups within the block we expect to commence the infill 2D seismic programme in the next few weeks, once the acquisition of the Platanillo 3D North programme is completed in the first days of April. The Environmental Impact Study for drilling in Putumayo 12 is well advanced and we expect to be drilling the first prospect there at the end of the year.

In Paraguay there is no change to the previous analysis, with P50 gross Prospective Resources of 620 MMBO. The Company is currently negotiating an extension to the exploration period in order to drill well Jaguarete-1 in 2016 or once oil sales prices reach a level of US$85.

 Summary of Gross Reserves and Resources at 31 December, 2014

Contract/Field  1P  2P    Prospective or Contingent Resources* 
Platanillo - Colombia  16.2  24.55    44.7 
Fenix - Colombia**        Up to 30 
Putumayo 12 - Colombia    305 
San Pedro Block- Paraguay  620 

*     Unaudited - Net Risked P50 Management Estimates

**    Contingent Resources - Under Review

 John Wardle, CEO of Amerisur Resources said:"

The Board considers the independent evaluation of the reserves in Platanillo to be a conservative view, which we believe would improve once the field can be brought to its full production potential. Additionally, the SCAL analysis, including definitive porosity and permeability measurement of the core samples from Platanillo-20 and the eventual commercial production from the T and N sands, plus our future drilling in the northern structures of Platanillo will have a positive impact on reserves next year." 

Competent person: Technical information in this announcement has been reviewed by John Wardle Ph.D., the Company's Chief Executive. John Wardle has 28 years' experience in the industry, having worked for BP, Britoil, Emerald Energy and Pebercan, and is a trained drilling engineer.

Source: EvaluateEnergy® ©2020 EvaluateEnergy Ltd