CALGARY, ALBERTA — (Marketwire) — 07/20/11 — Quetzal Energy Ltd. (TSX VENTURE: QEI) (“Quetzal” or the “Company”) has elected to not proceed with the previously announced plan of arrangement to spin out its Guatemalan assets to its shareholders through the creation of a separate publicly traded company. The board of directors will review several strategic alternatives to maximize shareholder value of its Guatemalan assets. In addition, the Company has withdrawn its request to approve Quetzal–s stock option plan due to a lack of shareholder support. The board of directors will examine compensation alternatives that will enable the Company to continue to attract, retain and motivate highly talented employees.
Colombia Operations Update
Canaguaro
The long term production testing of Canaguay #1 is continuing with the well currently producing approximately 500 barrels of oil and 150 barrels of water. The optimal production rate for the Mirador reservoir and facilities will be determined by the results of the long term production test.
Quetzal has a 25% working interest and is acting as the operator of the Canaguaro block and the Canaguay #1 well.
Block 27
A follow-up 54 square kilometer 3D seismic acquisition program has been completed in the south eastern portion of the block, and is currently being interpreted. The Company has defined drilling locations on three separate Block 27 structures, based on the interpretation of 3D seismic. Potential follow-up development drilling locations have been identified on several of these structures. Interpretation of the 3D seismic is continuing and several additional geological features are being studied as potential drilling locations.
Lengthy delays in the issuing of block environmental permits continue to adversely effect the operations of both large and small oil companies in Colombia. Quetzal has waited approximately 8 months for the Block 27 environmental permit. It is anticipated that permit will be granted during the 3rd quarter of 2011. Construction of drilling locations is scheduled to begin as soon as the required environmental permit is received. A two to three well drilling program is planned to commence approximately one month after location construction begins. The wells have a planned depth of approximately 10,000 feet and will test prospective oil bearing intervals in the Carbonera, Mirador and Une Formations.
Quetzal has a 50% paying interest in the block and is acting as operator.
Block 21
An 83 square kilometer 3D seismic survey has been competed on Block 21 and is currently being interpreted. Several geological features are being studied as potential drilling locations. The Company plans to drill 2 wells during the 4th quarter of 2011 or the 1st quarter of 2012.
Quetzal has a 50% paying interest in the block and is acting as operator.
Block 36
The acquisition of 109 square kilometers of 3D seismic on Block 36 has been completed and is being processed. Drilling of one 15,000 foot well is scheduled for 2012.
Quetzal has a 20% paying interest in the block.
Guatemala Update
A work-over was conducted on Atzam #2 and the well is producing approximately 40 barrels of 32 degree API oil and 420 barrels of water per day. The oil is trucked to Guatemala City and sold to end users who blend the oil with refined products and use the blend to fire furnaces or power diesel engines. The Company has recently sold loads of oil at prices in excess of WTI plus 20 dollars per barrel. The water is transported by pipeline and injected into the Atzam #1 water disposal well at minimum cost.
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.
Robert Szczuczko
Chief Executive Officer
(403) 606-1317