Emerald Energy Plc is pleased to provide the following update on operations in Colombia.
Mirto No.1 Exploration Well, Maranta Block
Drilling operations have commenced on the Mirto No.1 exploration well in the Maranta block, located in the Caguan-Putumayo basin in the south-west of Colombia. The Maranta block is adjacent to blocks containing producing oil fields, including the Costayaco field operated by Gran Tierra Energy Inc.
The Mirto No.1 well is designed to evaluate a structure with exploration potential in the Cretaceous aged Villeta and Caballos formations. The Company estimates that the Mirto prospect, if successful, may contain unrisked prospective resources in the range 5 to 15 million barrels. No.1 well is expected to have a total drilling depth of approximately 11,500 feet and take approximately two months to drill and evaluate.
Emerald holds a 100% working interest in the Maranta contract, awarded by the National Hydrocarbon Agency of Colombia (“ANH”). La Cortez Energy Inc. (“La Cortez”) will pay 65% of the cost of drilling and production testing the Mirto No.1 well as part of the consideration to earn a 20% working interest in the block, subject to the approval of the ANH.
Gigante No.2 Development Well
The Gigante No.2 well that commenced drilling in December 2008 has reached a planned intermediate casing point at a depth of approximately 15,185 feet. The 7 inch liner has been run into the well and cemented in place. The planned total depth of this well is approximately 16,000 feet; drilling and initial evaluation of the well is expected to be completed in the middle of 2009.
Capella Field Appraisal, Ombu Block
The initial well testing operations have been completed in the Capella No.6 well. Following the first open-hole test of the full lower Mirador conglomerate interval, which produced approximately 295 barrels of fluid per day with a water cut of approximately 90%, the lower part of the interval was isolated with a cement plug and the remaining interval was subsequently flow tested. During this flow test, oil production stabilised at a rate of approximately 90 barrels per day with water cut of approximately 25%.
The upper Mirador sand interval was encountered in the Capella No.6 well with net potential hydrocarbon pay of 80 feet of sand, greatly exceeding the previously recorded maximum net thickness of 23 feet encountered in the Capella No.2 well. A total of 3 cased hole flow tests were conducted in this interval and in each test the oil production stabilised at a rate of approximately 100 barrels per day with a water cut in the range of 2% to 5%. Based on initial evaluation of the data obtained during the tests, the Company believes that the rate was limited by a combination of sand production, pump capacity and the available completion equipment, and that there is potential to increase the rate from this interval by optimising the design of the well production equipment.
The Company plans to drill the first horizontal well in the field to target the thicker upper Mirador sand in the Capella No.6 area, and has scheduled the drilling of this well for the late third or early fourth quarter of 2009 to allow time to optimise the drilling and completion design based on the results of the Capella No.6 well. The drilling rig, which has successfully drilled six wells in the Capella field, is now being demobilised from the location.
The extended production testing of Capella wells continued on an intermittent basis in May due to marketing constraints, with an average monthly gross oil production rate during the month of approximately 250 barrels per day and a daily maximum of approximately 700 barrels per day.
Jacaranda Block Relinquishment
Following the results of the Jacinto No.1 exploration well, the Company has concluded its review of the remaining exploration potential in the Jacaranda block and has notified the ANH that it has decided not the enter the third exploration phase in the block, and to relinquish the block.
Gross oil production in the period from 1 January to 31 May 2009 has averaged approximately 4,030 barrels per day.
Emerald’s Chief Executive Officer, Angus MacAskill, said:
“We are very pleased with the progress in Colombia, with strong production from existing fields, the Gigante No.2 well approaching its target horizons, continued progress in the appraisal of the Capella heavy oil discovery, and the commencement of the Mirto No.1 exploration well. We look forward to the outcome of these activities, each of which has the potential to materially add to shareholder value.”