OilVoice - Petrolifera Petroleum Reports 2009 Year-end Reserves

Petrolifera Petroleum Reports 2009 Year-end Reserves

Saturday, February 27, 2010

Petrolifera Petroleum Limited has received the estimates of the company's 1P ("Total Proved"), 2P ("Total Proved plus Probable") and 3P (Total Proved plus Probable plus Possible) reserves, as prepared by GLJ Petroleum Consultants of Calgary, Alberta ("GLJ") in a report with an effective date of December 31, 2009 ("GLJ 2009 Report"). The company's reserves declined on a year over year basis, reflecting 2009 production and sales, and further technical revisions primarily arising from some continuing complications with the efficiency of the company's waterflood in the northern portion of the Puesto Morales Norte ("PMN") Field in the Neuquén Basin, Argentina. These declines were offset positively by modest recognition of additional reserves for the company in Colombia, but now all these reserves are classified in the Probable category.

Reserve Volumes and Values
The GLJ 2009 Report estimated that, after production of approximately 1.6 million barrels of crude oil and natural gas liquids, Petrolifera's 1P crude oil and natural gas liquids ("NGL") reserves decreased 32 percent to 7.7 million barrels as at December 31, 2009, compared to 11.3 million barrels at December 31, 2008. The decrease reflects sales and additional technical revisions in 2009, primarily associated with the performance of the waterflood in the northern portion of PMN Field. As 1P reserves declined, there is no basis for calculating reserve replacement ratios.

Petrolifera's 1P natural gas reserves also declined by almost 2.2Bcf or 21 percent to 8.2 Bcf after deduction of sales in 2009 of 1.7 Bcf and the adverse impact of technical revisions.

Petrolifera's 2P crude oil and NGL reserves decreased 19 percent to 13.9 million barrels, reflecting the impact of sales and negative technical revisions. At December 31, 2008, 2P crude oil and NGL reserves were 17.2 million barrels.

On an equivalent basis, Petrolifera's 1P reserves totaled 9.0 million boe at year end 2009 compared to 13.1 million boe in 2008, for a decrease of 31 percent. These reserves were forecast to generate $216 million of future net revenue, with an estimated pre-tax 10 percent present value ("10% PV") of $156 million.

On an equivalent basis, Petrolifera's 2P reserves were estimated to total 16.5 million boe at December 31, 2009 compared to 20.0 million boe in 2008, after production of 1.9 million boe and negative technical revisions. GLJ estimates these reserves will generate $426 million of future net revenue, with an estimated pre-tax 10% PV of $257 million. The company's calculated reserve life index, calculated by dividing remaining 2P reserves at December 31, 2009 by 2009 total boe sales, was approximately 9 years.

Petrolifera also commissioned GLJ to provide an estimate of possible reserves, which were last estimated effective December 31, 2008. GLJ estimated the company's 3P crude oil and NGL reserves to be 19.8 million barrels, with 3P natural gas reserves estimated at 28.8 Bcf and 3P equivalent reserves were estimated at 24.6 million boe. These reserves are estimated to generate $681 million of future net revenue with an estimated pre-tax 10% PV of $380 million.
The volume of possible reserves estimated at 8.1 million boe underscores continuing recognition of the development potential for both crude oil and natural gas of the lands reviewed in the GLJ 2009 Report, which included the La Pinta prospect in Colombia and the Puesto Morales/Rinconada Concession in Argentina.

These estimates did not include a review of the company's undeveloped exploratory concessions or the value of drilling opportunities at Vaca Mahuida, Gobernador Ayala II and Puesto Guevara in Argentina nor of Petrolifera's exploratory holdings or drilling opportunities, except for the La Pinta prospect, in Colombia and none of the company's extensive holdings in Peru.