Pacific Rubiales Energy Corp. provided Thursday an update on its exploration and production assets in Colombia, Peru and Guatemala for the first four months of 2011.
The Company's exploration portfolio currently covers 18,723,075 acres (gross), including 1,693,437 additional acres incorporated after the recent acquisition of 49.999% of the interests held by Maurel et Prom (Euronext Paris: MAU.FP) in the Sabanero, Muisca, SSJN-9, CPO-17 and COR-15 blocks, which are all exploratory blocks located on-shore in Colombia.
Ronald Pantin, Chief Executive Officer of the Company, commented: "This update illustrates the dynamic nature of the Company. We continue to fulfill our goal of having a strong and concerted effort for our exploration portfolio this year. We are fulfilling our long term objective to explore and produce oil in the most prospective basins in the sub-Andean region, while also securing market access to pave the way for further growth in the years to come."
As part of the Company's appraisal campaign in these blocks, between January 2011 and April 2011 the Company drilled a total of seven appraisal wells in the so-called "buffer zone" of the area set out in Rubiales-Piriri contract. The Rub-243, Rub-446, Rub- 447 and Rub-448 wells were drilled in the southernmost buffer zone of the Rubiales contract area, while the Rub-363, Rub-404 and Rub-534 wells were drilled in the eastern buffer zone of the Piriri Contract (see Figure 1). Six wells had successful results and extended the Rubiales reservoir into these areas, except the Rub-447 well that was dry.
The distance from the Rub-446 well (the southernmost successful appraisal well) to the Rub-534 well (the northernmost successful appraisal well) is greater than 14 km and the width of the appraised region averaged 3.5 km up to the boundary to where the Company has developed exploration activities so far. These wells allow for the evaluation of the hydrocarbon potential of an area in excess of 15,280 acres. These successful wells will extend the Rubiales field and open more opportunities for additional exploration activity with the buffer zone covered by the Rubiales-Piriri Contracts. With these results, the Company will make all the necessary arrangements to complete the long-term tests on these wells, drill additional appraisal wells, proceed to request Ecopetrol approval of the commerciality of this extension of the Rubiales field and file all necessary information in connection with the new reserves certification.
As a continuation of its exploration/delineation campaign in prospects "E", "H" and "J" in the Quifa SW commercial area, the Company drilled 15 wells from December 2010 to date: (i) the Quifa-37, Quifa-39, Quifa-52, and Quifa-81, appraisal wells in prospect "E" (ii) the Quifa-36, Quifa-45, Quifa-48, Quifa-49 and Quifa-53 appraisal wells in prospect "H" and (iii) the Quifa-DW1, Quifa-77 and Quifa-78 appraisal wells, and the Quifa-117, Quifa-119 and Quifa-120 stratigraphic wells in prospect "J".
Each of these wells was successfully appraised extending the Quifa SW proven area (prospects "E" and "H") and illustrating an extension of these oil accumulations south and southeast into Prospect "J", increasing the proven and probable area (2P) from 22,634 acres to 31,544 acres. Nine of the wells relating to this exploration campaign were used to support the 154 Mbbl of 2P reserves (gross) certified by Petrotech Engineering Ltd. as previously announced by the Company on March 11, 2011. The most recent wells, Quifa-117, Quifa-119 and Quifa-120, drilled on Prospect "J", support this proven acreage.
Once the Company receives the required environmental permits, production clusters will be drilled and the stratigraphic wells will be converted into producing wells, which the Company expects will allow for a re-categorization of most of the probable-non-producing reserves into proved-producing reserves.
The Quifa SW reservoir has been extended to the north with the drilling of six appraisal wells (Prospect "E" on the table). The Quifa-81 well was drilled 8 km to the northeast in the so-called "Quifa Corridor" area and the Quifa-37, 39 and 52 wells were drilled 2 km north-west, 4 km west to north-west and 4 km west to south-west of the reservoir, respectively. Also, the Quifa SW reservoir extended 2.5 km to the south-west and 2 and 5 km north-east with the drilling of the Quifa-36, 45, 48, 49ST and 53 wells in Prospect "H", respectively. The main activity occurred to the south of the core reservoir into Prospect "J", where the Company drilled 6 wells that extended the Quifa SW reservoir more than 2 km and 6.5 km south-east, respectively (Quifa-117 and Quifa-DW01 wells), 5 km south (Quifa-78 well) and 4 km south-west (Quifa-119 and 120 wells). The Quifa-77 well was drilled 17 km away from the main reservoir on the southeastern corner of the Quifa block and was dry.
In this northern part of the Block, the Company is still waiting for the environmental permits to begin the appraisal campaign that will include the drilling of 16 wells. These permits are expected to be granted is during June 2011. The Company has already managed to drill the Jaspe-2 appraisal well and Jaspe-3 stratigraphic well on prospect "A", the Zircon-1 stratigraphic well on what was interpreted to be the western extreme of prospect "Q", and the Ambar-3 stratigraphic well was drilled in prospect "F" (see Figure 3). This well was spudded at the end of December 2010. The Jaspe-2 well was drilled to appraise the western boundary of prospect "A" on a contour of 12 feet of net pay. The well found the top of the Basal Sandstones almost 15 deeper than predicted and found only 3 feet of net pay. The Jaspe-3 was drilled to evaluate the extension of prospect "A" to the northeast. This well found 29 feet of net pay and confirmed the extension of the prospect (4 km) in this direction. The Zircon-1 well was drilled to evaluate the western limits of Prospect "Q" and did not found oil-bearing sandstones. This well was originally drilled to evaluate 15 feet of net pay on Prospect "Q" on its western part, but we now interpret that the well entered a different compartment and drilled below the oil-water contact of Prospect "F". The Ambar-3 was drilled to the south of the previously drilled Ambar-1 exploratory well, and showed 2 feet of net pay due to a high shale content, The results of the Jaspe-3 and Ambar-3 were reported in the Company`s news release of February 3, 2011.
For the second half of 2011, and after receiving the environmental permits, the Company has scheduled drilling and testing 16 additional appraisal wells on Prospects "A", "F" and "Q", which will allow us to assemble all the necessary steps to support a commerciality request for those three reservoirs. Also, during this period, the Company will acquire 500 km2 of 3D seismic to improve the sub-surface image and consequently perform an improved cartography of the structural and stratigraphic models.
In the CPE-6 Block, the Company continued the exploration drilling campaign and drilled the Guairuro-5 and Guairuro-6 stratigraphic wells in the north-eastern and southern border of the Guairuro prospect, respectively. The Company announced the results of the Guairuro-5 well in its news release dated February 3, 2011. The Guairuro-6 stratigraphic well was drilled 10 km south of the Guairuro-4 well in the southern border of the Guairuro prospect. The well was designed to evaluate the following hypotheses: (i) the southernmost extension of the oil charge within the incised valley; (ii) a possible reservoir compartmentalization within this play of the C-7 units and along the basal sandstones; and (iii) the south-headed oil-spilling from the location of the Guairuro-4 well along the carrier beds of the C-7 sandstones. The petrophysical evaluation, as well as the cores taken at the C-7 unit, indicated high shale content at the C-7 unit. The C-7 interval exhibited five feet of reservoir 100% impregnated with hydrocarbons, and consequently, five feet of net pay with 27% porosity were interpreted. These findings confirm that the hydrocarbon system and charge effectively worked all the way to the south of the prospect, ratifying the prospectivity of this part of the block.
The well also found a thick sand interval atop the basement that has been interpreted as a local and isolated occurrence of sandstones and should be un-connected with the oil charge. Currently, the Company is considering drilling a north-deviated well into the center of the incision attempting to reach a thicker sandstone package at the C-7 units. Also, as a requirement of the Technical Evaluation Agreement ("TEA") contract, the well is currently drilling 1,000 feet within the Paleozoic units.
With the drilling of the Guairuro-6 well, all the exploratory commitments for the TEA contract with the Agencia Nacional de Hidrocarburos (the "ANH") have now been completed.
On April 1, 2011, as part of the planned strategy for CPE-6 block, the Company submitted to the ANH a request for a conversion of the TEA contract to an E&P contract in the northern part of the block, which is expected to occur during the second quarter of 2011, thus enabling the Company to include the drill results in its next reserves report.
Two exploration wells, TORODOI-1X and TORDO-1X are scheduled to be spudded in the Arauca block in June 2011. Both wells are commitments with the ANH and will be drilled down to the basement to an estimated true depth (TD) of 7,198 feet measured depth (MD) (or 6,785 feet true vertical depth sub-sea (TVDSS)) and 8,455 feet MD (or 6,631 feet TVDSS), respectively, with exploration targets in basal tertiary and cretaceous sands.
The wells will be drilled back to back starting with TORODOI-1X, to be drilled vertically, followed by TORDO-1X, looking for a second prospect located in the northern part that will have a slanted trajectory.
In connection with the Arrendajo block exploration commitments with the ANH, the Company finished the acquisition and processing of 130 km2 of 3D seismic. The interpretation of this new seismic will help to identify the location of an exploratory well to be drilled during the third and fourth quarter of 2011.
Lower Middle and Upper Magdelena Basins
The Apamate-1X well was drilled in the LCA-South prospect, located south of La Creciente "A" and La Creciente "D" gas fields, with a target in the Cienaga de Oro Formation.
As previously announced on February 28, 2011, the Apamate-1X well discovered gas on the basal Porquero units and showed average porosity and water saturation of 17% and 23% respectively, in a gross interval of 53 feet with a net-to-gross ratio around 70%. The well tested 24 MMcf/d with a inch choke. The Company already connected the well to the main facilities at La Creciente and will commence shortly the long-term tests. The Company scheduled the drilling of two appraisal wells for the Apamate Prospect for July 2011.
A total of 112 km of 2D seismic were acquired in the northeast part of the Block in the Pivijay area. The acquisition of 388 km in the west and south to complete the commitment of a 500 km seismic program was suspended due to severe flooding that affected the whole Lower Magdalena region.
In the Buganviles block, the Company suspended the Tuqueque-1X exploratory well, located to the northern part of the block. Currently, the Company is in the process of redefining the directional plan to continue drilling the well to reach the main objective, which is the Cretaceous Caballos Formation.
In the Abanico block, the Company started drilling the Gecko-1X exploratory well, located in the southern border of the block, which targeted the Cretaceous Caballos Formation at an approximate depth of 6,500 feet. The well presented a negative test on the Caballos Formation. The Company is now preparing the well to test the Barzalosa Formation, which exhibited numerous gas shows while drilling this section. This test is expected to be concluded during June 2011.
In the Dindal-Rio Seco block, and specifically in the Guaduas field, the Company started drilling the Capira-1X exploratory well, located in the southern reaches of the block. The well is targeting the Cretaceous Cimarrona Formation at an approximate depth of 8,751 feet MD. The well is expected to reach TD at the end of May, 2011.
In the Topoyaco block the Company plans to start drilling Prospect "D" in July, 2011. This prospect is a sub-thrust structural trap that the Company believes is independent from previously drilled structures "B" and "C" in the block. Our technical team estimates that the prospective resources (best estimate) could be in the order 51 MMboe. The Company is also waiting for the ANH to approve the evaluation plan for the recent discovery made at the Topoyaco 2 well on Prospect "B" in the Neme Member of the Rumiyaco Formation. The Topoyaco 1 well is suspended and awaiting abandonment.
Tacacho and Terecay
The Company recently agreed with its partner Petrodorado Energy Ltd. on the design of 480 km of 2D seismic in the Tacacho block, which the Company is planning to acquire together with 476 km of 2D seismic in the Terecay block during the fourth quarter of 2011.
The Company is finishing acquisition of 537 km of 2D seismic data in Block 138. Preliminary interpretation of field processed data has allowed the identification of at least 4 exploratory leads at Cretaceous and Paleozoic stratigraphic levels, which are to be confirmed with the interpretation of the fully and final processed data. Upon interpretation, the Company will select a location to drill an exploratory well, fulfilling its drilling obligations at the beginning of 2012.
The Company is waiting for environmental permits in order to begin 2D seismic data acquisition, which is expected to commence in July 2011. There is no exploration activity taking place on this block at this time.
Blocks N-10-96 and O-10-96
During the first quarter of 2011, the Company continued the exploratory program definition for the "N-10-96" and "O-10-96" blocks. The exploratory activities for 2011 in Guatemala will include: (i) seismic reprocessing of 300 km of 2D seismic; (ii) acquisition and processing of additional 300 km of 2D seismic; (iii) 5,300 km of aero-magnetic and aero-gravity data; (iv) 6,600 km2 of remote perception surveys; (v) a surface geology campaign (already underway, including samples analysis); and (vi) the beginning of an integrated geological interpretation to define exploration prospect locations to be drilled in 2012.
The exploratory program was submitted in February 2011 to Guatemala's Ministry of Energy and Mines. The Company expects approval of the exploratory program in the second quarter of 2011.
Since the beginning of 2011, the Company has been steadily increasing its production level from the Rubiales/Pirir and Quifa fields. Although the production potential has been available at wellhead since the beginning of the year, the actual production has been capped by the limited capacity of the OCENSA pipeline system associated with delays in their expansion project. In addition, the heavy rains in Colombia during the first quarter impaired the Company's capacity to transport oil via truck.
The elimination of the transportation bottlenecks through the coming into operation of the expansion project at the OCENSA pipeline has allowed for the materialization of the planned production levels.
The combined operated gross production from the Rubiales and Quifa fields stands today at the historical milestone of 207,000 bbl/d, confirming the area as the most prolific oil region in Colombia.
La Creciente and Other Gas Production Fields
In the La Creciente natural gas field the production has averaged 60.5 MMcf/d, which has been limited by Promigas operational restrictions in the gas line to the Cartagena region. When those restrictions are not in place the La Creciente field has reached record production of 70 MMcf/d. A temporary sales gas scrubber and gas heat exchanger/pre-cooler were installed and commissioned. These installations will be replaced by permanent components during the capacity expansion construction phase later this year.
Two Amine plants for removing off-spec carbon dioxide content were brought online at the Abanico (1.5 MMcf/d) and Guaduas (5 MMcf/d) fields. These plants currently allow gas sales to industrial users and vehicular natural gas.
The total gross production of the Company, including the natural gas and light and medium oil fields stands at 225,000 boe/d as of May 12, 2011.
Securing and expanding access to transport capacity through participation in the ODL pipeline is an integral part of the Company's growth strategy. On May 4, 2011, the ODL pipeline pumped a historic record of 246,588 bbl/d. The ODL pipeline will reach its full hydraulic capacity of 340,000 barrels per day during the third quarter of 2011.
STAR Project in Quifa
In March 2011, the Company and Ecopetrol agreed to continue with the STAR Project in the Quifa field, that if proved successful (as is expected) will be a step forward towards the utilization of the technology in the near future. In the Rubiales and Quifa fields the main management guidelines relate to:
The preparation of the platforms for production and well facilities have already been designed and built and are now located at the Quifa field. The installation of the entire STAR pilot program infrastructure will start in a few days and is expected to finish in 2 to 3 months at which point the Company will provide a further update. The drilling of the five wells will start as soon as environmental permits are awarded.
Maurel et Prom Acquisition
On May 6, 2011, PRE-PSIE COOPERATIEF U.A., a Dutch co-operative owned by the Company, successfully acquired from Les Etablissements Maurel & Prom, S.A. a 49.999% interest in Maurel and Prom Colombia B.V., which owns the following hydrocarbon interests located on-shore in Colombia:
Pacific Rubiales, a Canadian-based company and producer of natural gas and heavy crude oil, owns 100 percent of Meta Petroleum Corp., a Colombian oil operator which operates the Rubiales and Piriri oil fields in the Llanos Basin in association with Ecopetrol, S.A., the Colombian national oil company. The Company is focused on identifying opportunities primarily within the eastern Llanos Basin of Colombia as well as in other areas in Colombia and northern Peru. Pacific Rubiales has working interests in 45 blocks in Colombia, Peru and Guatemala.
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