Citation Resources Ltd is pleased to advise the electric log analysis by Schlumberger has confirmed the significant commercial potential of the Atzam #5 well. The log evaluation shows potential net pay in excess of 200 feet across all carbonate zones in the well, with multiple zones demonstrating high gas saturations and porosity. The logs analysis, combined with the significant oil shows from multiple zones whilst drilling, detail the commercial potential in the well from the C13 carbonates down to the lower C18 carbonate structures drilled.
Review of the Atzam #5 log data confirms the well has very similar reservoir characteristics to the Atzam #4 well. The full Schlumberger log dataset and associated drilling reports have been provided to the independent reservoir consultants Ralph Davis, who are currently preparing a detailed reserve report for the Atzam #5 well. The Atzam #5 log data also helps confirm the extension of multiple carbonate reservoir sections across the Atzam structure drilled to date.
The first phase of flow testing operations is continuing on the lower C18 carbonates in the open hole section in the Atzam #5 well, which was successfully drilled to a total depth of 4,025 feet and generated significant oil shows to surface whilst drilling. The flow testing of the lower C18 carbonates in the open hole section below the casing at 3,600 feet is only the first phase of the planned operations, which may include testing many potential pay zones from the C13 to C18 carbonates as prioritised by the log evaluation to establish a strong commercial flow rate from the well.
The initial flow testing operations were conducted as an open hole test of the lower C18 and C19 carbonates from below the final casing point at 3,600 feet. Due to the well intersecting a major salt plug between the lower C18 and C19 carbonates, cement plugs were recently laid in the base of the well to seal off the salt lens. As the C19 carbonates in Atzam #5 are located below the cement plugs, this section will be tested from a different location as part of the ongoing development of the Atzam Field.
Independent Atzam #5 Reserves Report
Following completion of the drilling operations at Atzam #5, the Operator ran a full suite of electric logs from the first carbonate sections intersected down to the wellís total depth of 4,025 feet. Leading global oilfield services firm Schlumberger has completed its independent review of the electric logs run across all carbonate sections in Atzam #5.
The full suite of logging data and reports from Schlumberger have been passed onto Ralph Davis who are completing a reserve report on the Atzam #5 well and on the Atzam Field.
Atzam #5 drilling success indicates upside potential
The Atzam #5 well being drilled close to the structural high of the Atzam Oil Field was confirmed through the intersected depths of primary reservoir sections in drilling operations. On completion of the Atzam #5 well at its TD is running approximately 66 feet high on structure to the Atzam #4 well and approximately 320 feet high to the Atzam #2 well. The Atzam #4 well was previously expected to be sitting on the crest of the Atzam structure and the Atzam #2 well recorded initial flow rates of in excess of 1,000 bopd from the primary C18/19 carbonate sections.
Issue of Shares and Options
As announced on 19 May 2014, the Company will issue 65,000,000 fully paid ordinary shares as part of Citationís long term incentive and retention program for key personnel related to the successful development of the Atzam and Tortugas oil projects in Guatemala. The Company has also issued 8,750,000 unlisted options ($0.015, 3 year expiry) as part of its recent debt facility (with issue of the remaining 57,250,000 unlisted options subject to shareholder approval at the Companyís next General meeting).