TORONTO, ONTARIO — (Marketwire) — 09/13/11 — Quetzal Energy Ltd. (TSX VENTURE: QEI) (“Quetzal” or the “Company”) is pleased to provide the following update on operations:
Block 27
As previously announced, Quetzal completed a 220 square km 3D seismic survey of Block 27 in Q1 2011 and then followed that up with an additional 54 square km survey in Q2 2011. Merge, analysis and interpretation of this seismic has been completed and management has identified 4 drillable prospects on the block.
On August 10, 2011, Quetzal received its blanket environmental permit paving the way to proceed with the drilling of its first well on Block 27. Construction of the location began on August 29, 2011, and the Company expects to spud this first well with a rig contracted from Saxon Energy Services in the second half of October. Once drilling begins, management expects to reach target depth of 10,000 feet in 45 days.
Prospective targets include the oil bearing intervals in the Mirador and Une Formations, with the Carbonera formation representing a secondary target.
Quetzal pays 50% of cost and has a 45.275% revenue interest in this block before payout, and a 34.25% interest following payout.
Block 21
A 95 square kilometer 3D seismic program has been completed on Block 21, and management is near completion of its analysis and interpretation. Preliminary evaluation has identified 4 potential prospects of interest on Block 21 with further detailed analysis required.
On August 3, 2011, Quetzal filed for its environmental permit on Block 21 and is awaiting approval. Under contractual commitments to the ANH, and by the terms of its farm-in agreement, Quetzal and their partner, Brownstone Ventures, must drill two wells by September 12, 2012. Assuming environmental approval is received in a timely fashion, the Company expects to commence wellsite construction in Q1 2012, and drill two wells in Q2 2012.
Projected well depths at Block 21 are 8,000 feet.
Quetzal pays 50% of cost and has a 45.50% revenue interest in this block before payout, and a 35% interest following payout.
Canaguaro Block
A long term production test began on May 4, 2011 with an ESP set at approximately 6,000 feet depth, approximately 8,000 feet above the producing Mirador formation. Since that time, Quetzal has averaged approximately 400 barrels of oil per day and has witnessed the water cut go from and average of 18% in May to 33% in August. Initial reservoir pressure was registered at approximately 5,850 psia in May, and management has witnessed some decline in bottom hole flowing pressure since commencement of the long term test. In late August, Quetzal shut in the Canaguay 1 well for 6 days to conduct a pressure build up test. Over that short period, well pressure returned to within 100 psia of the May pressure indicating that reservoir pressure depletion is not significant. Given that the perforations are only 30 feet above the plug back depth, management believes that sand production is likely causing a restriction in flow, and reduced bottom hole flowing pressure. The Company and its partners now plan to service the well by conducting a cleanout of the well, replacing the ESP, and placing the new ESP at a deeper depth in the well closer to the producing zone. It is management–s expectation that this will lead to increased fluid production and a resultant increase in oil production as well. This work is expected to be completed by November 1 and is budgeted at a net cost to Quetzal of $250,000.
Quetzal has a 25% working interest in the Canaguaro Block and is acting as operator of the well.
Block 36
The acquisition of 109 square kilometers of 3D seismic on Block 36 has been completed and analysis and interpretation continues. Drilling of one well is required by February 2012 and the Operator, Montecz continues to evaluate options to meet activity requirements of the ANH. Quetzal pays 20% of cost and has a 18.2% revenue interest in this block before payout, with a 14% interest following payout.
Guatemala Update
As part of Quetzal–s ongoing strategy to maximize shareholder value, the Company continues to evaluate strategic alternatives. The Company is actively evaluating options including selling the Guatemalan assets or soliciting third party joint venture partners to assist in developing the Guatemala blocks.
Technical Management Additions
Quetzal is also pleased to announce that it has made two key additions to its technical team. Quetzal has retained Alconsult International Ltd. (“Alconsult”), a Calgary based group of engineers, geologists and management professionals, to provide engineering, geological and operational management in support for Quetzal–s projects in Colombia.
On behalf of Alconsult, Mr. David J. Birnie will be working with Quetzal in the capacity of Geoscience Advisor and Mr. Stephen E. Balog will work with Quetzal in the capacity of Engineering Advisor.
David J. Birnie
Dave Birnie is a senior Canadian oil and gas exploration consultant who currently serves as President of GEOSEIS Inc., an oil and gas geological, geophysical, data and technical services company he co-founded in 1997 (). Mr. Birnie also leads GEOSEIS– geological and geophysical consulting practice which specializes in international exploration projects, both onshore and offshore. Prior to consulting, Mr. Birnie held progressive technical and supervisory responsibilities with Chevron Corporation in Canada, the U.S. and Indonesia (1974-1995). He worked for 16 years as a geophysicist/geologist followed by 6 years in a planning and economic evaluation role. In Canada during the late 1980–s he started up a geophysics team to support Chevron–s development geology group and then subsequently served as leader/supervisor of the West-Central Alberta exploration group. During the 1990-95 period he served as Manager of Planning for Chevron Canada Resources.
Mr. Birnie is an expert in exploration methodologies, exploration risk assessment, and exploration resource probabilistic modeling (size-of-the-prize modeling). He has taught industry courses on exploration management and reserves assessment and modeling.
Mr. Birnie holds Bachelor and Master degrees in Geological Engineering and Geophysics respectively from Queens University (1972) and the University of British Columbia (1976). He also holds a Master of Business Administration degree, specializing in Finance (1981). Mr. Birnie is a registered APEGGA Professional Geophysicist in Alberta as well as a member of CSEG, CSPG and SEG.
Stephen E. Balog
Stephen Balog has thirty eight years of experience in the oil and gas industry in production and exploration operations, petroleum engineering, property evaluations and mergers/acquisitions. He has held senior engineering, operations and executive management positions in both senior and junior production companies. He has a proven track record in planning and leading major oil and gas development and exploitation projects, and the management of oil and gas operations throughout Western Canada. Mr. Balog has lead and coordinated several major projects to develop and exploit natural gas, heavy and conventional oil.
Technical and project management experience includes oil and gas field development, production optimization, operations management, enhanced recovery process evaluation and project design, property evaluations, corporate reserves management and acquisitions/divestitures.
During the past fourteen years he has founded and been a principal or director of several junior oil companies and consulting firms including Belaire Energy Corporation, Niven Fischer Balog Energy Management, Tasman Exploration and West Butte Management Inc. Most recently Mr. Balog held the position of President and Chief Operating Officer of Tasman Exploration Ltd., a private junior oil and gas company. He now provides management consulting services to oil and gas corporations, specifically in the areas of evaluations and acquisitions, oil and gas development, and petroleum engineering.
Mr. Balog currently serves as a Director of Advantage Oil & Gas Ltd., a public company with 25,000 boepd of production in Western Canada. He also serves on the Petroleum Advisory Committee of the Alberta Securities Commission and is a member of several industry associations including the Society of Petroleum Evaluation Engineers where he served on the Reserves Evaluation Committee to draft and edit Volumes I and II of the Canadian Oil & Gas Evaluation Handbook. The latter has become the industry standard for the evaluation and appraisal of reserves. He is a registered member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta.
About Quetzal Energy Ltd.
Quetzal is a junior oil and gas company with its primary assets in the Llanos Basin of Colombia; the Company also has oil and gas assets in Guatemala.
Cautionary Statements
This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws (together, “forward-looking information”). The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “believe”, “plans”, “intends”, “confident”, “may”, “objective”, “ongoing”, “will”, “should”, “project”, “should” and similar expressions are intended to identify forward-looking information. In particular, but without limiting the foregoing, this news release contains forward-looking information concerning the use of proceeds of the recently completed offering of units of the Corporation.
The forward-looking information is based on certain key expectations and assumptions made by Quetzal, including expectations and assumptions concerning the operational results in Colombia and Guatemala. Although Quetzal believes that the expectations and assumptions on which the forward-looking information are based are reasonable, undue reliance should not be placed on the forward-looking information because Quetzal can give no assurance that they will prove to be correct.
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 inherent risks involved in the exploration and development of oil and gas properties, the uncertainties involved in interpreting drilling results and other geological data, uncertainties relating to fluctuating oil and gas prices, the possibility of cost overruns or unanticipated costs and expenses and other factors including unforeseen delays. Anticipated exploration and development plans relating to Quetzal–s properties are subject to change.
The foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information contained in this press release is made as of the date hereof and Quetzal undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
NEITHER THE 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.
Contacts:
Quetzal Energy Ltd.
Ron MacMicken
Chief Executive Officer
(647) 476-7572