Ramrod Gold to acquire producing oil properties in Ecuador's Oriente Region; acquisition to provide immediate cash flow; positive net operating cash flow of U.S. $12 million expected by first year end.VANCOUVER, British Columbia--(BUSINESS WIRE)--July 13, 1995-- Consolidated Ramrod ram·rod n. 1. A rod used to force the charge into a muzzleloading firearm. 2. A rod used to clean the barrel of a firearm. 3. A harshly demanding overseer; a disciplinarian. tr.v. Gold Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CYNXF) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CYN CYN Canyon ) (Berlin OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). :CRC (Cyclical Redundancy Checking) An error checking technique used to ensure the accuracy of transmitting digital data. The transmitted messages are divided into predetermined lengths which, used as dividends, are divided by a fixed divisor. ) Thursday announced that the government of Ecuador has approved the new participation contract between Petroecuador and City Investing, thus facilitating the acquisition of City Investing Co. Ltd., a Bermuda corporation, by Ramrod for U.S. $20 million. As a result, Ramrod will own two oil exploitation concessions located in the oil-rich Oriente Region of Ecuador. The two concessions are: City Block, a self-sustaining, fully functional facility currently producing more than 4,700 barrels of oil per day (BOPD BOPD Barrels of Oil Per Day BOPD Bataan Ocean Petroleum Depot ), 100-percent owned by City Investing; and Block 27, 50- percent owned by City Investing and 50-percent by Ramrod. ''The acquisition of City Investing marks the beginning of Ramrod's move to become a major natural resources exploration and production company,'' said Karl Rollke, Ramrod's president and chief executive officer. ''It also significantly increases the overall value of our company. The present net value of City Block's proven oil reserves Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally combined with its infrastructure are valued at about U.S. $140 million, which alone is greater than the total current market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. of Ramrod.'' ''Oil sales from the combined City Block and Block 27 concessions will provide us with immediate cash flow, and we expect positive net operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. in excess of U.S. $12 million by the end of the first year. This cash flow enables us to move forward with planned development of other natural resource projects. ''Based on current production and additional development at these two concessions, we should be able to recover our initial U.S. $20-million investment in less than two years, and generate annual operating cash flow of approximately U.S. $30 million within four years.'' In conjunction with the acquisition, Ramrod is negotiating a major financing. Proceeds from the financing will be used to fund the acquisition of City Investing, exploration and development projects and working capital purposes. Cash Flow Combined with Low-Risk Potential ''The cash flow provided by oil production at City Block and Block 27 is essential to Ramrod's overall growth strategy,'' stated Rollke. ''This steady source of income allows us to step-up development at many of our highly promising mining projects, particularly at the Damoti Lake project in the Northwest Territories Northwest Territories, territory (2001 pop. 37,360), 532,643 sq mi (1,379,028 sq km), NW Canada. The Northwest Territories lie W of Nunavut, N of lat. 60°N, and E of Yukon. , the Atlanta project in Idaho and our pending gold production in Honduras.'' ''We also believe these oil concessions represent excellent low- risk possibilities for additional oil production,'' added Rollke. ''These two blocks exemplify ex·em·pli·fy tr.v. ex·em·pli·fied, ex·em·pli·fy·ing, ex·em·pli·fies 1. a. To illustrate by example: exemplify an argument. b. the youth and vast oil potential of the entire Oriente Basin. ''By 1991, the Region had already produced 1.6 billion barrels of oil, and production continues to increase. Exploration of City Block and Block 27 to date has been limited to oil fields This list of oil fields includes major fields of the past and present. The list is incomplete; there are more than 40,000 oil and gas fields of all sizes in the world[1]. identified during the 1970s. Neither concession has been fully developed, as vast areas are yet to be explored. ''To verify our belief in the potential of City Block, we contracted Ramsey Engineering Inc., an Oklahoma-based petroleum consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a , to conduct a study of oil reserves that are directly associated with the wells that are currently producing. Ramsey conservatively placed the present worth of these reserves to be in excess of U.S. $82 million,'' added Rollke. The following is a summary of findings of the Ramsey study:
City Block Proved Reserves
Effective March 31, 1995
(All values rounded to nearest one hundred)
Proved Reserve: Estimated Net Future Net Present Worth
Reserves in Income /a @ 10% Discount
Barrels Rate
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Producing 5,043,400 U.S. $40,420,500 U.S. $26,718,200
Behind-Pipe 528,100 U.S. $ 2,101,400 U.S. $ 1,509,300
Undeveloped 7,464,300 U.S. $94,463,800 U.S. $54,585,900
Total proven 13,035,700 U.S. $136,985,700 U.S. $82,813,300 a/ Net income is after estimated operating costs and Ecuadorian royalty, but no consideration has been given to income tax, depreciation or depletion allowance or unamortized indebtedness of any kind. Present worth of future net income has been computed by discounting at 10 percent, compounded annually, for income received in the equivalent of one payment each mid-year. The Ramsey Engineering study evaluated the ''Proved Reserve'' attributable to the interests of Ramrod Oil and Gas (USA) Inc. as calculated from the producing wells on the Fanny, Mariann and Tarapoa structures. A study conducted by Petroproduccion, an affiliate of Petroecuador, year-end 1994, estimates an additional 45,587,419 barrels of probable reserves from the Hallelujah Hallelujah (hăl'əl  `yə) or Alleluia (ăl–) [Heb.,=praise the Lord], joyful expression used in Hebrew worship; cf. Pss. Structure and the Hollin Formation Sands,
both of which are part of the City Block.Petroproduccion estimates that total reserves of 150 million barrels are probable or possible on the City Block acreage, which consists of 109,000 acres. ''Don H. Ford, vice president, oil and gas, a seasoned geologist on the Ramrod team, initially identified this opportunity for us,'' explained Rollke. ''Ford has extensive oil and gas knowledge and comprehensive first-hand experience in the Oriente Region. He was involved in the initial oil exploration of the area in the late 1960s.'' Favorable Contract with Ecuador ''Our successful contract negotiations with the Ecuadorian government earlier this year played an important role in acquiring City Investing,'' stated Rollke. On March 31 of this year, the company announced the signing by the president of Ecuador of a participation contract between Petroecuador, City Investing and Ramrod. Under terms of this contract, the Ecuadorian government will receive 21 percent of oil production from Block 27 up to 30,000 BOPD, increasing to 31 percent on the next 30,000 BOPD and 50 percent on any incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. production over 60,000 BOPD with a constant effective tax rate of 36.25 percent over a 20-year period. This contract also represented the official acceptance by the Ecuadorian government of Ramrod's bid for the Block 27 concession. Ramrod to Increase Oil Production at City Block and Block 27 Under current development strategies, the company expects that production from City Block will increase in 1996 to nearly 10,500 BOPD, providing Ramrod with an estimated cash flow of U.S. $14 million, based on an oil price of U.S. $15 per barrel. City Block's production in 1997 is expected to reach more than 14,000 BOPD, resulting in an estimated cash flow to the company of U.S. $21 million. Ramrod will pursue two strategies to increase oil production at these two concessions. First, by implementing a recompletion and workover program at existing oil wells, oil production is expected to reach the 8,000 BOPD range by the fourth quarter of this year. This program is expected to cost U.S. $1 million to U.S. $2 million, and primarily involves the removal of paraffin paraffin, white, more-or-less translucent, odorless, tasteless, waxy solid. It melts between 47°C; and 65°C; and is insoluble in water but soluble in ether, benzene, and certain esters. buildup build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. from well openings that significantly hampers oil flow. Second, Ramrod plans to implement a program to drill new wells. Management believes this plan could conservatively bring total oil production to 15,000 BOPD. This program entails identifying and drilling new oil fields, as well as developing additional drill sites in current oil fields. State-of-the-art techniques, such as 3-D seismic surveys, will be used to determine new drilling locations. City Block Property City Block covers approximately 109,000 acres of Ecuador's Oriente Region in the northeastern section of the country. Presently, City Block has three oil fields producing approximately 4,700 BOPD from 14 wells. The property has a complete, functional infrastructure, with a replacement value of approximately U.S. $60 million, including a modern basecamp, with a housing capacity for 25 executives and more than 500 workers; a paved pave tr.v. paved, pav·ing, paves 1. To cover with a pavement. 2. To cover uniformly, as if with pavement. 3. To be or compose the pavement of. airstrip with a modern control tower capable of handling large cargo planes cargo plane n → avión m de carga cargo plane n → avion-cargo m cargo plane cargo n → on its 6,000-foot runway; warehouses and shops for on-site inventory and repair; central production facilities and storage tanks of approximately 50,000- barrel capacity; and access to the fields and wells by all-weather roads. These roads also provide access to pipeline facilities, which transport City Block's oil to the Ecuadorian pipeline and on to refineries in Esmeraldas, located on Ecuador's west coast. Block 27 Property Block 27, a 369,000-acre concession, is situated to the northeast of the City Block. Two wells on this concession, located in the center of the property, each tested at about 1,000 BOPD. Ramrod has identified 21 potential well sites in the western half of this block, and has yet to explore the eastern half. The western edge of Block 27 is adjoined by several very productive oil fields, including Cantagallo, Sansahuari, VHR VHR Visual Flight Rules VHR Video to Hardcopy Recorder VHR Very High Resolution and Singue. Petroecuador, in conjunction with the National Directorate of Hydrocarbons of the Ministry of Energy, estimated that Block 27 has reserves of up to 277 million barrels of recoverable oil. On July 19, 1994, Ramrod announced that it had placed the winning bid with the Ecuadorian government for Block 27, making it an equal partner with City Investing. As part of its commitment to the Ecuadorian government, Ramrod is committed to invest U.S. $13 million in the development of Block 27 in the next two years. Ramrod plans to implement a comprehensive program to develop 166 wells on six oil fields over an eight-year period. This program involves construction of necessary infrastructure, including roads, pipelines and electric utilities. ''When Don originally evaluated the Oriente Region in the late 1960s, he identified the area we now know as Block 27 as having the best oil potential,'' stated Rollke. ''This potential remains relatively untapped. ''The synergies in operating both City Block and neighboring neigh·bor n. 1. One who lives near or next to another. 2. A person, place, or thing adjacent to or located near another. 3. A fellow human. 4. Used as a form of familiar address. v. Block 27, with its tremendous oil producing potential, include having the extensive infrastructure in place at City Block to access Block 27. In essence, we have a U.S. $60-million head start in the exploration and development of Block 27.'' Oriente Basin Oil Fields Ecuador oil fields are situated in the Oriente Basin on the east flank of the Andes Mountains Andes Mountains Mountain system, western South America. One of the great natural features of the globe, the Andes extend north-south about 5,500 mi (8,900 km). They run parallel to the Caribbean Sea coast in Venezuela before turning southwest and entering Colombia. , extending from Venezuela to Peru. The oil reservoirs An oil reservoir, petroleum system or petroleum reservoir is often thought of as being an underground "lake" of oil, but it is actually composed of hydrocarbons contained in porous rock formations. in this area are typically driven by underground water supplies, which results in high oil recovery rates. Oil was first discovered on the northern Oriente Region City Block concession in 1971 in what is now City Block's Mariann Oil Field. To date, the Mariann Field has produced more than 5 million barrels from seven wells. The Fanny Oil Field was next discovered in 1972 and has produced 18 million barrels of oil to date. The third and smallest City Block Oil Field, Tarapoa, has two wells which have produced 1.6 million barrels of oil. Ramrod's Strategy and Holdings In addition to its Ecuadorian holdings, Ramrod has a substantial portfolio of mineral properties in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada and Honduras, and has acquired interests in oil and gas properties in Texas and Guatemala. The company's development philosophy is to undertake a systematic exploration program on its mineral properties, to the point of identifying a significant target. Ramrod then seeks to bring in a major industry partner to take the property through to the feasibility study The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. stage. This strategy limits the company's financial exposure while maintaining a significant direct equity interest in these properties. Three Ramrod gold projects that hold significant potential are Damoti Lake, Atlanta gold and Zopilote (formerly Chaparrales Permit), Honduras. Damoti Lake, potentially the most significant gold project in Ramrod's portfolio, was named the ''Drill Intercept of the Year'' by The Mining Record in its March 22, 1995, issue. Exploration work at this 11,200-acre property, located approximately 90 miles north of Yellowknife in the Northwest Territories of Canada, has discovered a banded iron formation Banded iron formations (also known as banded ironstone formations or BIFs) are a distinctive type of rock often found in primordial sedimentary rocks. The structures consist of repeated thin layers of iron oxides, either magnetite or hematite, alternating with bands with multiple deposits of gold over a length of 7.5 miles. To date, 10 gold bearing zones have been identified. Three of the gold zones have drill-indicated reserves of 600,000 ounces of high grade gold within 300 feet of the surface. During the second half of 1995, activities on the property will include a major drill program to further expand the gold reserves. An inclined tunnel will be driven to bulk sample the Horseshoe horseshoe, narrow plate, commonly of iron or steel, shaped to fit a horse's hoof and attached to the hoof by nailing it to the inner edge of the horny wall of the hoof. zone at depth. The tunneling is designed to accommodate expected commercial production in the near future. Damoti Lake Joint Venture Partners expect to ultimately define a multi-million ounce gold reserve. The partners have committed to fast-tracking exploration and development work on the project. Ramrod maintains 51 percent ownership of this joint venture project, Athabaska Gold Resources Ltd., 24 percent and Gitennes Exploration Inc., 25 percent. Atlanta Gold, located 60 miles north of Boise, Idaho “Boise” redirects here. For other uses, see Boise (disambiguation). Boise is the capital and most populous city of the U.S. state of Idaho. It is the county seat of Ada County and the principal city of the Boise metropolitan area. , contains 1.1 million ounces of proven gold and 3 million ounces of proven silver deposits. Ramrod hopes to begin permitting for mineral production at this property by 1996, with anticipated gold production in excess of 75,000 ounces annually at an approximate operating cost of U.S. $230 per ounce. Additionally, the company has recently conducted deep underground drilling to expand its gold reserves. Ramrod has announced a proposed takeover of Atlanta Gold Corp. to facilitate 100-percent ownership of the Atlanta project. Consolidated Ramrod Gold and its subsidiaries are engaged in the acquisition, exploration and development of natural resource properties. The company has an extensive portfolio of precious and base metals properties as well as oil and gas projects in Canada, the United States and Central and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. . Ramrod Oil and Gas is establishing a production and cash flow base through drilling and the acquisition of producing properties. CONTACT: Consolidated Ramrod Gold Corp. David Jackson David Jackson is the name of several notable men:
or Financial Relations Board Daniel Saks, 310/442-0599 (general info.) Moira Conlon, 310/442-0599 (analyst contact) Jerry Miller Jerry Miller (born July 10, 1943 in Tacoma, Washington) is an American musician, a guitarist and vocalist who was a member of the 1960s San Francisco band Moby Grape. Before joining the group, Miller and bandmate Don Stevenson were members of The Frantics, a Pacific Northwest bar , 212/661-8030 (media contact) |
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