PetroMagdalena Provides Production and Exploration Update

    




 TORONTO, Feb. 7, 2012 /CNW/ - PetroMagdalena Energy Corp. ,  today provided an update on its ongoing exploration program previously  announced on January 18, 2012, and provided a production update for a  new discovery on the Arrendajo block. 

 Luciano Biondi, Chief Executive Officer of the Company stated: "We  continue to make substantial progress with our first quarter  exploration program. The result from the discovery at Azor is very  positive. The incremental production we have from this well underpins  our cash flow and provides the financial support that will allow us to  expand our 2012 work program. The new Azor-1X well adds 587 bopd to our  gross working interest production. We have also made good progress on  our exploration program with intermediate casing set on the Santa  Cruz-1X well, logging and casing the Cernicalo-1ST well and the  Arrendajo Norte-1X well just south of the Azor discovery will reach  total depth by the end of the week. As previously indicated, the first  quarter incorporates intensive drilling activity." 

 PRODUCTION  UPDATE 

 Azor-1X production test 

 The Azor-1X well has been completed and was put on production on January  31, 2012. The well produced at a stable rate of 1,181 bopd, 0.3% water  cut and a well head flowing pressure of 270 psi, natural flow with a  20/64th of an inch choke over the first 12 hours. The choke was then  changed to 16/64th of an inch and the well flowed at a stable average  rate of 870 bopd with a wellhead flowing pressure of 290 psi of natural  flow and a 0.3% water cut over a continuous 6-day period.  This results  in 587 bopd gross working interest for the Company. 

 The Azor-1X well was spudded on December 24, 2011 and discovered the  Azor field on the Arrendajo Block, north of the Cubiro Block in the  Llanos Basin and on January 17, 2012, PetroMagdalena initiated  production testing on the C5 sand with the announcement on January 18,  2012 that the zone was tested at 752 bopd of 35.5 degrees API oil with  1% -BS&W.  The final permit allowing for permanent production is  currently in process. 

 The Azor field is located on the Arrendajo Block in the Llanos Basin,  where the Company has a 67.5% working interest, subject to ANH  approval. 

 EXPLORATION UPDATE 

 Arrendajo Block, Llanos Basin: Arrendajo Norte - 1X Exploration well 

 After drilling the discovery well, Azor-1X, the drilling rig has moved  to another location on the Arrendajo block, Arrendajo Norte-1X, where  the rig spudded on January 28, 2012 and has completed drilling to 588  feet (MD), after logging, the surface casing has been run and cemented.  It is anticipated that the well will reach the projected TD of 7022  feet (MD) by February 10, 2012 to test the Carbonera sequence that was  successful in the Azor-1X well, which is located 3 kilometers to the  north. 

 Cubiro Block, Llanos Basin: Cernicalo - 1ST Exploration well 

 The Cernicalo-1ST well on the Cubiro Block has been drilled to a TD of  6,792 feet (MD) and has completed electric logs. Based on these  results, 7-inch production casing has been run in the well to total  depth and plans are in place to complete and production test the  Guadalupe and C7 Carbonera Formations.  Results from the completion and  testing program are expected before the end of February 2012.  PetroMagdalena has a 70% working interest in the Cernicalo-1ST well and  is the operator of the Cubiro Block. 

 Santa Cruz Block, Catatumbo Basin: Santa Cruz -1X Exploration well 

 After spudding the Santa Cruz-1X exploration well on November 20, 2011,  intermediate casing of 9 5/8 inch was set at 9,533 ft MD and drilling  has progressed to 10,580 ft MD.  It is expected the well will reach TD  before the end of February 2012. This well is being drilled adjacent to  the Rio Zulia field. 

 For location details on these wells, please refer to the Company's  investor presentation at www.petromagdalena.com. 

 PetroMagdalena is a Canadian-based oil and gas exploration and  production company, with working interests in 19 properties in five  basins in Colombia. Further information can be obtained by visiting our  website at www.petromagdalena.com. 

 All monetary amounts in U.S. dollars unless otherwise stated. This news  release contains certain "forward-looking statements" and  "forward-looking information" under applicable Canadian securities laws  concerning the business, operations and financial performance and  condition of PetroMagdalena. Forward-looking statements and  forward-looking information include, but are not limited to, statements  with respect to estimated production and reserve life of the various  oil and gas projects of PetroMagdalena; the estimation of oil and gas  reserves; the realization of oil and gas reserve estimates; the timing  and amount of estimated future production; costs of production; success  of exploration activities; and currency exchange rate fluctuations.  Except for statements of historical fact relating to the company,  certain information contained herein constitutes forward-looking  statements. Forward-looking statements are frequently characterized by  words such as "plan," "expect," "project," "intend," "believe,"  "anticipate", "estimate" and other similar words, or statements that  certain events or conditions "may" or "will" occur. Forward-looking  statements are based on the opinions and estimates of management at the  date the statements are made, and are based on a number of assumptions  and subject to a variety of risks and uncertainties and other factors  that could cause actual events or results to differ materially from  those projected in the forward-looking statements. Many of these  assumptions are based on factors and events that are not within the  control of PetroMagdalena and there is no assurance they will prove to  be correct. Factors that could cause actual results to vary materially  from results anticipated by such forward-looking statements include  changes in market conditions, risks relating to international  operations, fluctuating oil and gas prices and currency exchange rates,  changes in project parameters, the possibility of project cost overruns  or unanticipated costs and expenses, labour disputes and other risks of  the oil and gas industry, failure of plant, equipment or processes to  operate as anticipated. Although PetroMagdalena has attempted to  identify important factors that could cause actual actions, events or  results to differ materially from those described in forward-looking  statements, there may be other factors that cause actions, events or  results not to be anticipated, estimated or intended. There can be no  assurance that forward-looking statements will prove to be accurate, as  actual results and future events could differ materially from those  anticipated in such statements. PetroMagdalena undertakes no obligation  to update forward-looking statements if circumstances or management's  estimates or opinions should change except as required by applicable  securities laws. The reader is cautioned not to place undue reliance on  forward-looking statements.  

 Statements concerning oil and gas reserve estimates may also be deemed  to constitute forward-looking statements to the extent they involve  estimates of the oil and gas that will be encountered if the property  is developed. Boe may be misleading, particularly if used in isolation.  A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency  conversion method primarily applicable at the burner tip and does not  represent a value equivalency at the wellhead. Estimated values of  future net revenue disclosed do not represent fair market value. 

 Neither 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 news  release. 

 Glossary 




     _____________________________________________________________________
    |1P: Proven reserves              |G&A: General and Administrative    |
    |                                 |Expenses                           |
    |_________________________________|___________________________________|
    |2P: Proven + Probable reserves   |MMCF: Million Cubic Feet           |
    |_________________________________|___________________________________|
    |3P: Proven + Probable + Possible |MD: Measured Depth                 |
    |reserves                         |                                   |
    |_________________________________|___________________________________|
    |ANH: Agencia Nacional de         |MMBBLS: Million Barrels of Oil     |
    |Hidrocarburos                    |                                   |
    |_________________________________|___________________________________|
    |API: American Petroleum Institute|MMBTU: Millions British Thermal    |
    |                                 |Unit                               |
    |_________________________________|___________________________________|
    |BOE: Barrels of Oil Equivalent   |                                   |
    |_________________________________|___________________________________|
    |BOFD: Barrels of Fluid Per Day   |NPV: Net Present Value             |
    |_________________________________|___________________________________|
    |BOPD: Barrels of Oil Per Day     |PSI: Pounds per Square Inch. The   |
    |                                 |unit of pressure.                  |
    |_________________________________|___________________________________|
    |BOEPD: Barrels of Oil Equivalent |TD: Total Depth of the well        |
    |Per Day                          |                                   |
    |_________________________________|___________________________________|
    |BS&W: Basic Sediments and Water  |TVD: True Vertical Depth of the    |
    |                                 |well                               |
    |_________________________________|___________________________________|
    |E&PC: Exploration & Production   |TVDSS: True Vertical Depth Sub Sea |
    |Contract                         |                                   |
    |_________________________________|___________________________________|
    |ESP: Electric Submersible Pump   |WI: Working Interest               |
    |_________________________________|___________________________________|
    |FOB: Freight on Board            |WTI: West Texas Intermediate Oil   |
    |                                 |Price Index                        |
    |_________________________________|___________________________________|





    

   

PetroMagdalena Energy Corp.


CONTACT:  Michael DaviesChief Financial Officer(416) 360-7915Belinda LabatteInvestor Relations Representative(647) 436-2152 


    

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