Americas Petrogas Inc. is pleased to provide the following update of its unconventional shale oil and shale gas activities in Argentina.
Unconventional Shale Oil and Gas
- On the Los Toldos II block, the shale oil discovery well, LTE.x-1, is continuing with testing and is currently on a pressure build-up test. The well will be re-opened in 30-60 days when facilities, such as a gas/liquid separator and liquid storage tanks, are completed.
- On the Los Toldos II block, the ADA.x-1 unconventional well was previously reported to have drilled through 340 meters or 1,115 feet of the primary target Vaca Muerta shale formation with oil and gas shows through most of this shale section. Hydrocarbon shows were also encountered in secondary targets such as the Agrio, Quintuco and Tordillo. The ADA.x-1 well is being prepared for completion during third quarter of 2013.
- The ALL.x-1 well, on the Los Toldos I block, was previously reported to have flowed from 1.3 million cubic feet (36,738 cubic meters) per day to 3.2 million cubic feet (90,418 cubic meters) per day of natural gas with 9 to 18 barrels of oil per day condensate (54-58 degree API) on managed choke sizes (4-6mm). The Company completed a successful 30-day test through tubing with very encouraging results. Plans are being made to connect the well to a nearby regional gas pipeline, which would allow the Company to sell any produced gas.
- In March 2013, a workover was completed on the LHo.x-1 well on the Totoral block, individually testing each of the three fractured intervals. This testing determined that all of the fracture stages are vertically connected and confirmed the large extension of the fractures from the hydraulic stimulation performed on the well. The detailed analysis completed on all of the static information available, logs, conventional and sidewall cores, shows no evidence that there could be free water in the Vaca Muerta formation.
Therefore, management is of the opinion that the water comes from the underlying Quebrada del Sapo and/or Lotena formations. Plans are being made to put the well on production with Early Production Facilities, including company-owned separator and tanks, beginning in the third quarter for a test period of at least six (6) months. As well, Americas Petrogas is considering the drilling of one or two Vaca Muerta vertical appraisal wells in order to optimize the evaluation of the Vaca Muerta formation. Additionally, consideration is being given to horizontal drainage of the Vaca Muerta formation, as this area may be technically and economically ideal, given its relatively shallow depth, for a horizontal drilling development.
- Americas Petrogas has engaged Ryder Scott Company to prepare a resources report on the Company’s unconventional properties. The report is expected to be completed by early third quarter of 2013.
Americas Petrogas is the Operator of the Los Toldos blocks and holds a 45% work interest. ExxonMobil also owns a 45% work interest with the remainder held by Gas y Petroleo del Neuquen (GyP). On the Totoral, Yerba Buena, Bajada Colorada blocks, the Company holds a 90% working interest while GyP holds the remaining 10%.
Argentina Loans
The Company’s subsidiary, Americas Petrogas Argentina S.A. (“APASA”), has recently obtained two loans (the “Loans”) from the Industrial and Commercial Bank of China (Argentina) S.A. in the total amount of AR$50 million Argentine Pesos (AR$) (equivalent to approximately US$9.4 million at current exchange rates). Industrial and Commercial Bank of China (“ICBC”) is the largest bank in the world by market capitalization and recently purchased an 80% stake in Standard Bank Argentina.
Barclay Hambrook, President and CEO, stated, “We are pleased to be making progress on our unconventional (shale) blocks, adding value through de-risking of the Vaca Muerta shale and other formations.” Mr. Hambrook went on to say, “The recent loan funding, which is denominated and repayable in Argentine Pesos, will help facilitate our capital expenditure program on Medanito Sur. This, in turn, will allow the Company to generate additional production and cash flow without the need for additional equity funding. We are very happy to have established a relationship with Industrial and Commercial Bank of China and to have been able to borrow money in local Argentine Pesos.”
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Shale Gas Projects 
