Gran Tierra announced the Kanatari-1 exploration well in Peru encountered a thick, excellent reservoir-quality section with a thick top-seal section, but no hydrocarbons. In addition, in Colombia, initial testing of the Moqueta-4 delineation well in the Moqueta oil discovery flowed 1,674 barrels of oil per day ("BODP") without pumps from two reservoirs, and additional oil was recovered from a third reservoir by swabbing. No evidence of an oil-water contact has been identified, leaving open the potential for additional reserves down-dip.
"We are disappointed with the lack of hydrocarbon shows in the Kanatari-1 frontier exploration well, but are intrigued by the presence of a spectacular reservoir-quality sandstone section capped by a thick sealing shale section. New 2D seismic data indicates the sandstone section pinches out up-dip on the Iquitos Arch in a trapping position with considerable upside potential. With this new data, we will continue to evaluate the prospectivity of the large, unexplored acreage position we have established in this portion of Peru," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "In addition, our test results at Moqueta-4 have exceeded our expectations, with delineation and development planning continuing in our new oil discovery, along with our other ongoing exploration and development programs in Colombia."
Kanatari-1 Exploration Well, Block 128, Peru (100% Working Interest and Operator)
Kanatari-1, a frontier exploration well located on the eastern flank of the Marañon Basin, 130 kilometers east of the nearest offset well in Peru, spud on February 8, 2011 and reached total measured depth ("MD") in basement at 3,395 feet on March 3, 2011. The well encountered a sandstone reservoir sequence 932 feet thick overlying basement, which was encountered at 3,247 feet MD. Total net reservoir of 692 feet with average porosity of 25% was interpreted from wireline logs acquired after drilling. The reservoir section was overlain by 256 feet of sealing shale sequence. No oil or gas shows were noted during drilling and interpretations from wireline logs indicate the reservoirs are water bearing. Kanatari-1 will be plugged and abandoned.
Kanatari-1 confirms the presence of two key components of a petroleum system on Block 128, the presence of reservoir and seal, with petroleum migration and trapping remaining unproven. Interpretation of the well data and integration with recent 2D seismic data acquired on Block 128 indicates a potential stratigraphic pinchout play analogous to those trapping hydrocarbons in the Orinoco Belt of Venezuela exists up-dip from the Kanatari location. This potential will be the focus of Gran Tierra Energy's ongoing evaluations. Future drilling activities in Block 122 will depend on the integration of the well results to the new 2D seismic data and regional geologic model.
Moqueta-4 Delineation Well, Chaza Block, Colombia (100% Working Interest and Operator)
Gran Tierra Energy completed initial testing on the Moqueta-4 delineation well by collecting reservoir data and fluid samples from the Villeta T-Sandstone, the Lower U Sandstone and the Caballos formations.
In the Caballos formation, seven intervals totaling 74 feet were perforated and tested from 4,612 feet MD to 4,732 feet MD. Oil flowed naturally without assistance from pumps at 431 BOPD, with an oil gravity of 27.8° API and watercut of 0.5%.
In the Villeta T-Sandstone zone, three intervals totaling 39 feet were perforated and tested from 4,484 feet MD to 4,531 feet MD. Oil flowed naturally without assistance from pumps at 1,011 BOPD, with an oil gravity of 26.4° API and watercut of 0.1%.
When co-mingled, the Caballos and T-Sandstone intervals together flowed 1,674 BOPD without assistance from pumps with a watercut of 0.8%.
In the Lower U Sandstone formation, one interval totaling 26 feet was perforated and tested from 4,284 feet MD to 4,310 feet MD. A total of 18.2 barrels of oil were produced after 13 hours of swabbing operations, with an oil gravity of 16.3° API and watercut of 6%.
Data from Moqueta-4 was not included in the results of an independent reserve evaluation of the company's reserves by GLJ Petroleum Consultants Ltd. effective December 31, 2010. That evaluation, using SEC standards, assigned 1.180 million barrels of oil ("MMBO") to Proved reserves, 2.979 MMBO to Prove plus Probable reserves (2P) and 9.685 MMBO to Prove plus Probable plus Possible reserves (3P), all net after royalty. The well was drilled within the area where Possible reserves were assigned; a portion of these reserves are expected to be moved to the Proved category as a result of the Moqueta-4 test data in the next independent reserve evaluation.
As no evidence of an oil-water contact has been identified from the available well data in the four Moqueta wells drilled to date; there remains potential for additional oil down-dip on the flanks of the Moqueta structure. Plans are underway to drill Moqueta-5 from the same location as Moqueta-4. This well is expected to be drilled in April and is expected to be a deviated well drilled directionally to the south to further delineate the Moqueta oil discovery.
The construction of a six-inch diameter, eight-kilometer long pipeline from Moqueta to Costayaco facilities has commenced and construction is expected to be completed by the end of April, 2011. Long term testing of the Moqueta oil wells is expected to then commence upon the completion of construction.
Canangucho-1 Exploration Well, Chaza Block, Colombia (100% Working Interest and Operator)
The Canangucho-1 exploration well located to the east of the Costayaco field is drilling ahead with initial results expected in late March.
Juanambu-3 Development Well, Guayuyaco Block, Colombia (70% Working Interest and Operator)
The third and final development well in the Juanambu oil field has begun drilling. This well is expected to take approximately 30 days to drill and is expected to be tied into existing facilities upon completion.
Corporate production for Gran Tierra Energy has averaged approximately 13,500 BOPD, net after royalty ("NAR"), in February, 2011, up from approximately 12,200 BOPD NAR in January, 2011, as production was ramping up through the month following upgrade activities at Tumaco port. Production is currently averaging approximately 15,900 BOPD NAR.
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