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April 18, 2008 |
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GRAN TIERRA: Closes Costayaco-3 Testing With 2,543 Barrels/Day Gran Tierra Energy Inc. had completed initial testing operations on Costayaco-3, a new well drilled in the recently discovered Costayaco Field in Colombia. The company also updated progress being made with additional drilling activities and production infrastructure development. Colombia Operations Costayaco-3, Chaza Block: On April 6, Gran Tierra completed initial testing operations for Costayaco-3, the third well drilled in the Costayaco field, a new oil field discovered in 2007. The Costayaco field is located in the Chaza Block in the Putumayo Basin, where the company has a 50% interest and is the operator, with Solana Resources holding the remaining 50% interest. The well drilled through the same reservoir sequences encountered in Costayaco-1 and -2, reaching a total depth of 8,620 feet on Feb. 20. Log interpretations from data acquired during drilling indicate potential hydrocarbon pay in the Kg Sand Unit of the Rumiyaco Formation, the U Sandstone Unit of the Villeta Formation, the T Sandstone Unit of the Villeta Formation and the Caballos Formation. The company implemented a drill-stem test (DST) and flow-test (FT) program to evaluate the Caballos Formation and the T Sandstone Unit, the two primary reservoirs in the Costayaco Field. The shallower reservoirs will be tested and considered for completion later in field life when the primary reservoirs become depleted. DST-1: (8,514 to 8,528 and 8,533 to 8,537 foot measured depth interval; 18 feet of perforations) tested an apparent water leg in the Lower Caballos Formation. 325 barrels of water with no oil was obtained by swabbing. DST-2: (8,490 to 8,502 foot measured depth interval; 12 feet of perforations) further tested the apparent water leg in the Lower Caballos Formation. 160 barrels of water with no oil was obtained by swabbing. DST-3: (8,470 to 8,480 foot measured depth interval; 10 feet of perforations) tested an apparent oil leg in the Lower Caballos Formation. 141 barrels of oil with no water was obtained by swabbing. FT-1: (8,376 to 8,386, 8,392 to 8,404, 8,406 to 8,424 and 8,436 to 8,458 foot measured depth intervals with 62 feet of perforations in the Upper Caballos Formation; and 8,242 to 8,264, 8,270 to 8,282 and 8,295 to 8,305 foot measured depth intervals with 44 feet of perforations in the T Sandstone Unit) tested both the upper Caballos Formation and T-Sandstone Unit combined. A maximum natural flow rate of 2,543 oil barrels per day of 30.2 API oil was obtained through a 128/64 inch choke with only a trace (0.1%) of water. At the end of the 36 hour test the flow rate was still increasing. Results of the testing program confirm an oil-water contact at approximately 8,486 feet measured depth in the lower Caballos Formation. This is the first definitive identification of an oil-water contact in the Costayaco field. This data will allow reserves in the Caballos Formation to be more accurately calculated and will allow full-field development planning for this interval to begin. No evidence of an oil-water contact has been identified in the shallower pay zones; further delineation drilling will be required to determine the oil-water contact in the T Sandstone Unit. Final completion operations are currently underway in preparation for selected interval testing and long term testing in Costayaco-3. Costayaco-4, Chaza Block: Drilling operations are continuing at Costayaco-4. This is a deviated well being drilled from the Costayaco-2 pad, and will have a bottom-hole location approximately 541 meters to the north. The drilling is expected to be completed in late May and will include coring of key reservoir intervals. Testing of Costayaco-4 will follow. The company plans to drill Costayaco- 5, -6 and -7 during 2008. Putumayo Basin Operations: The company has programmed a Long Term Test for Costayaco-2 in the next four months. Long Term Test production rates for Costayaco-2 will vary from 1,800 oil barrels per day to 3,500 oil barrels per day from different zones which will be determined and adjusted during the testing period. A Long Term Test is currently being designed for Costayaco-3 as well. Gran Tierra expects construction of an 8 inch 10 kilometer pipeline from Costayaco-1 to Uchupayaco to begin in mid-April and to be completed in mid-July. This production line will replace the current trucking operations. The company is continuing work to reduce production constraints beyond Uchupayaco in order to accommodate planned production growth from Costayaco, which is expected to rise to 6,000 to 9,000 oil barrels per day gross during the second half of 2008. The company is currently evaluating a second stage of infrastructure expansion to incorporate additional drilling through the balance of 2008 and potentially into 2009. Popa-2 Exploration Well, Rio Magdalena Block: The company has nearly completed location construction for the Popa-2 exploration well in the Rio Magdalena Block in the Middle Magdalena Basin, with drilling expected to begin April 24. This well will be drilled near a non-commercial oil discovery made by Gran Tierra in 2006 at Popa-1, which tested approximately 160 oil barrels per day. The company is the operator of the Rio Magdalena Block and has a 100% working interest. Under the terms of a recently completed farmin agreement, Omega Energy Colombia will earn a 60% share of the company's interest. In the event of a commercial discovery, Ecopetrol S.A. has a right to back in for a 30% working interest, to be split proportionally between Gran Tierra Energy and Omega Energy Colombia. Azar Block: The company is continuing planning for the work-over of the Palmera-1 well, an exploration well drilled in 1996 that had potential oil pay indicated on logs but which was never tested. Operations are scheduled to begin in late April. In addition, the company is continuing to interpret newly acquired 3-D seismic data in preparation for drilling an exploration well in the fourth quarter of 2008. Gran Tierra is operator of the Azar Block and has a 40% working interest. Peru Operations The company is continuing to acquire approximately 20,000 linear kilometers of new high definition airborne gravity and magnetic data over the entire area of Blocks 122 and 128. Approximately 16,926 linear kilometers, or 85% of the program, has been acquired to date. This data will be used to define exploration leads over which 2-D seismic data will be acquired in the Second Exploration Period of each block. Block 122 encompasses approximately 1.2 million acres and Block 128 encompasses approximately 2.2 million acres of land. Gran Tierra is operator and holds a 100% working interest in both exploration blocks. Argentina Operations The company is continuing with well design, rig contracting, and planning for the drilling of the Proa-1 exploration well in the Surubi Block in the Noroeste Basin of northern Argentina during the third quarter of 2008. Gran Tierra is operator and has a 100% working interest in this block. In addition, technical evaluation work and a variety of well work-overs continue in the company's other six landholdings in the basin. Commenting on progress, Gran Tierra Energy Inc. President and Chief Executive Officer, Dana Coffield stated, "The extension of high-quality, oil-bearing reservoir further down the flanks of the Costayaco field increases the recoverable reserve potential of the field. In addition, the identification of an oil-water contact in the lower of two major reservoirs in the Costayaco oil discovery should allow us to quantify those additional reserves and accelerate the pace of field development planning. We are on track in executing our strategy of continuing field delineation drilling and production testing operations, new exploration drilling operations, and new exploration data acquisition operations taking place across our three operating arenas of Colombia, Peru, and Argentina." About Gran Tierra Energy Headquartered in Calgary, Alberta, Canada, Gran Tierra Energy Inc. (OTC BB: GTRE.OB) -- http://www.grantierra.com/ -- is an international oil and gas exploration and production company, incorporated and traded in the United States and operating in South America. The company holds interests in producing and prospective properties in Argentina, Colombia and Peru. At Dec. 31, 2007, the company's balance sheet showed total assets of US$112.79 million, total long term liabilities of US$36 million and total shareholders' equity of US$76.79 million. Successive Net Losses As reported in the Troubled Company Reporter on Jan. 4, 2008, the company disclosed in the regulatory filing that it "has a history of net losses." The company said it expects to incur substantial expenditures to further its capital investment programs and the company's existing cash balance and cash flow from operating activities may not be sufficient to satisfy its current obligations and meet its capital investment commitments. According to the company, its ability to continue as a going concern is dependent upon obtaining the necessary financing to acquire, explore and develop oil and natural gas interests and generate profitable operations from its oil and natural gas interests in the future. |
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