Outstanding! Looks like a solid business plan has been arranged. Wonder if they'll rename the company "Resurrection Oil and Gas"...
Solana implements Colombian petroleum program
Shares issued 20,289,055 Apr 17 2002 close $.050
Wednesday Apr 17 2002 News Release
Mr. J. Bruce Carruthers reports
Solana Petroleum has implemented a Colombian petroleum production program, whereby the company will purchase interests in existing oil and gas reserves and production, and acquire other properties in Colombia with high potential for reserves where drilling has already occurred and the presence of petroleum has been established. A number of such opportunities are presently available in Colombia, which has been a reliable non-OPEC petroleum supplier to the United States since oil exports began in the mid-1980s. The Colombian government has also recently introduced favourable changes to its Petroleum regulations to stimulate exploration and production, including the reduction of royalties and a larger share of petroleum for contractholders that develop production discovered after 1999.
Three hundred thirty thousand barrels per day or almost half of Colombia's oil production of 700,000 barrels of oil per day, is exported to the United States, principally to the gulf coast, making Colombia the seventh largest source of United States imports. Colombian crude oil is generally lighter and sweeter than other South American imports.
Dr. Keith S. Hewitt, currently a director of the company, has been appointed president and chief executive officer of Solana Petroleum Exploration (Colombia) Limited, with responsibility for managing the company's Colombian operations and overseeing the Colombian petroleum production program. Dr. Hewitt, a petroleum engineer, has over 25 years of international drilling and production experience, the past 12 of which have been in Colombia. He was most recently general manager of Emerald Energy Colombia. Dr. Hewitt's previous posts included consultant to GHK/Seven Seas Petroleum and operations manager for Texaco in Colombia, where he was responsible for both onshore and offshore drilling and production. The prior 13 years were spent in a number of international drilling and production management posts with Texaco.
To implement the Colombian petroleum production program, Solana has applied to Ecopetrol for a new association contract in the Llanos basin of northeastern Colombia -- the country's most important oil producing basin, which currently yields 565,000 barrels of oil per day from Upper cretaceous and Tertiary formations. The contract block, which bears only a 5-per-cent royalty under Colombia's new petroleum law, contains two very well defined structures as determined by previous seismic surveys, with reserve targets of five million and 15 million barrels. These structures are controlled by the same fault system that contains a nearby 30 million barrel oil field. The smaller structure contains a well drilled by a previous contractholder, which according to Solana's reinterpretation of the seismic, is located structurally low to an indicated 50-foot oil pay. Although the well was abandoned, there is strong evidence from electric logs and gas shows of an oil water contact in the well supporting the seismic interpretation. If Ecopetrol approves the application, Solana, as operator of the contract, will initiate an additional 40-kilometre seismic survey and will then drill a crestal well on the structure. This feature may be capable of an initial 4,000 barrels of oil per day of gross production from two wells. Solana would retain a 66.5-per-cent net revenue interest in any production encountered. A pipeline with substantial excess capacity is within 15 kilometres of the structure and the security situation in the area is manageable.
As the second step in the Colombian petroleum production program, Solana is in negotiations with other contract holders in Colombia to purchase varying available interests in a total of four small existing producing fields in Colombia's prolific Magdalena basin. With production commencing in 1905, the Magdalena basin is Colombia's oldest petroleum region. Today the basin produces about 115,000 barrels of oil per day from Tertiary formations. The area has been largely insulated from security problems in recent years.
All the fields have substantial additional production potential through additional development drilling via either infill or step-out drilling, or by the initiation of secondary recovery operations (water flooding). Current gross oil, gas and condensate production from 10 wells in the four fields totals approximately 2,700 barrels of oil equivalent per day, of which Solana's share would be approximately 860 barrels of oil equivalent per day in the event the purchases are effected.
In conjunction with the Colombian petroleum production program, Solana has registered a $600,000 non-brokered private placement consisting of six million units -- one unit consisting of one common share at 10 and one-half warrant, with two warrants entitling the purchaser to buy one Solana share at 15 within six months. The proceeds from the private placement will be used to finance initial seismic activities on the new Llanos block, to open Solana operations offices in Bogot and Miami, and for general corporate purposes. The Miami office will permit good proximity to operations in Colombia as well as direct exposure to the large potential Latin American investor base residing in Florida.
Mr. Carruthers concluded: "Opportunities for the smaller oil companies willing to persevere in Colombia are outstanding, against a backdrop of concern regarding the current instability associated with traditional United States oil import sources and rising oil prices. Solana's entry into production situations, if successful, will also permit use of some $3.0-million (U.S.) in Colombian tax loss carryforwards resulting from our exploration drilling program in 1998-2000. I look forward to the implementation of Solana's Colombian petroleum production program, beginning with our new Llanos block. I am also very pleased to have someone with Dr. Hewitt's extensive drilling and production experience directing the program."
WARNING: The company relies upon litigation protection for "forward-looking" statements.
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