TORONTO, ONTARIO--(Marketwire - March 26, 2012) - Quetzal Energy Ltd. (TSX VENTURE:QEI) ("Quetzal" or the "Company") is pleased to provide the following operational update:
In early February, the electric submersible pump ("ESP") at the Canaguay-1 well began to run into complications due to the same high viscosity emulsion that was addressed in the October, 2011 workover. Due to this, the well was suspended on February 7th in order to run a second workover. During this workover, a new ESP was installed at 12,000 feet and a considerable amount of high viscosity emulsion was removed that was plugging the well and limiting its productivity. On March 15th the well was put back on production and during the first seven days the well produced emulsion and water that had built up during the shut in phase. During this initial stage, management observed that fluid and oil production continued to increase while watercut decreased. During the four days from March 22 to March 25, average fluid production stabilized at approximately 2,000 BFPD, oil production was approximately 1,320 BOPD and water production was approximately 675 BWPD (34% watercut).
Quetzal has a 25% private participating interest in the Canaguaro Block.
Llanos 27 Block
Mani-1 Exploration Well
On January 16, 2012, Quetzal announced an oil discovery in the Mani-1 exploration well. Initial production rates from the test were 1,510 BFPD with a 32% watercut equating to approximately 1,025 BOPD of 14 degree API oil. During the course of the following 57 hour test, fluid and oil production rates improved to 2,310 BFPD and a 16% watercut equating to approximately 1,940 BOPD of 16 degree API oil. Following the initial test, the well was suspended while regulatory approval was applied for to place the well on extended test.
On March 7, Quetzal and its partners placed the well on extended test following receipt of regulatory approvals. Since that time, management has observed that total fluid production has continued to increase and watercut has also continued to increase. Current fluid production is approximately 1,960 BFPD, oil production is approximately 640 BOPD and water production is approximately 1,320 BWPD (67% watercut).
As described in the Company's January 16 press release, there was a failure with the liner hanger during completion that caused problems with executing the cement job needed to ensure proper isolation of the Mirador formation. Two remedial cement jobs were completed at that time and it was believed that proper bonding was achieved. However, given the current increase in watercut, management is now investigating whether: a) the cement job from the original completion has failed to hold properly causing water to seep from lower zones; or b) if the water is being produced from the target reservoir. Management's intention is to continue monitoring production for the next number of days until stabilized watercut has been established before determining next steps.
Flami-1 Exploration Well
As previously announced, Quetzal and its partners expect to spud the Flami-1 well by May 1. Civil works continue on time and on budget and spudding of the well is still expected by May 1.
About Quetzal Energy Ltd.
Quetzal is a junior oil and gas company with private participating interests in 4 blocks in the Llanos Basin of Colombia; the Company also has oil and gas assets in Guatemala.
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.