February 16, 2010 / 6:32 PM / 8 years ago

UPDATE 1-Petrominerales shrs hit life-high on Colombian oil find

* Says oil well Candelilla-2 producing over 15,800 bopd

* Cases oil well Yenac-1 as potential oil source

* To start drilling for oil well Candelilla-3 this week (Adds details, analyst’s comments, updates share movement)

By Ashutosh Joshi

BANGALORE, Feb 16 (Reuters) - Petrominerales Ltd PMG.TO shares rose 19 percent to hit a lifetime high Tuesday, a day after the oil explorer said its Candelilla-2 oil well in Colombia has started production, and it was casing another well as a potential oil source.

The company, in which Petrobank Energy and Resources PBG.TO has a majority stake, said the Candelilla-2 well was producing over 15,800 barrels of oil per day (bopd), taking the total production from two Candelilla wells to 27,000 bopd.

“Between the two wells that have been brought on production in last six weeks, they have more than doubled the total production of the company,” Clarus Securities analyst Kirk Wilson said by phone.

With the addition of Candelilla-2, total company production is now 43,800 bopd, Petrominerales said.

Petrominerales, which placed Candelilla-1 on production on Dec. 31, said combined production from the two wells on Guatiquia block was restricted to 27,000 bopd due to flow-line limitations.

The company plans to install an additional flow-line later this week to allow production to increase to the current capacity of 30,000 barrels of fluid per day.

Petrominerales also said it was casing Yenac-1 well on Casimena block in Llanos plains as a potential oil well. The well will be first in Petrominerales’ 13-well exploration program for Llanos plains.

Analyst Wilson said it will be important to see how quickly these wells level out, as oil wells in the company’s Corcel block had declined quickly from a very high initial production rate.

At least two brokerages raised their price targets on the oil explorer’s stock, and increased their production outlook for the company for 2010 and 2011.

UBS raised its price target on the stock to C$30 from C$26, while RBC raised its target to C$26 from C$24.

Petrominerales shares were up 13 percent, or C$3.15, at C$26.55 in afternoon trade on the Toronto Stock Exchange. They hit a life-high of C$27.85 earlier. (Reporting by Ashutosh Joshi in Bangalore; Editing by Ratul Ray Chaudhuri)

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