Americas Petrogas announced three conventional oil discoveries from the recently-completed exploration drilling program on the Rinconada Norte block (96 sq.km. or 37 sections) located in La Pampa Province in the eastern margin of the Neuquén Basin of Argentina.
Americas Petrogas' wholly-owned Argentina subsidiary, Americas Petrogas Argentina S.A., is the operator of the Rinconada Norte block, holding a 65% working interest, while Gran Tierra, through its Argentina subsidiary, holds a 35% working interest.
The three exploration wells lie along a NE-SW line with RN.x-1004 in the center, RN.x-1001 to the SW and RN.x-1000 to the NE. The distance between the wells is approximately two kilometers. This wide separation can readily account for the differences in the results of the tests.
The first of these wells (RN.x-1004) was announced September 12, 2011 as a significant discovery with 1,023 barrels of oil equivalent per day and gravity of 29.6 degrees API (light oil) from the Precuyo formation. This is similar to the oil currently being produced from the same formation in Americas Petrogas' Medanito Sur Block immediately to the north. The intervals tested, 982-992 meters and 1022-1032 meters, indicated an oil column of 60 meters (197 feet) thick. The total well depth was 1150 meters.
The service rig then moved to the second well, RN.x-1001. This well tested 24 barrels of oil per day plus 459 barrels of water in a 22-meter thick sandstone at the top of the Precuyo formation. The oil gravity is 29.3 degrees API, similar to the oil tested in the RN.x-1004 well. The low percentage of oil produced in the 24 hour test demonstrates that the well may have encountered the oil-water contact and, therefore, there may be possibilities to drill water-free wells in structurally higher positions. The interval tested was 1057-1072 meters and the total depth was 1250 meters.
The service rig then moved to the third well, RN.x-1000. This well tested 87 barrels of oil per day with 185 barrels of water from the 893-900 meter interval at the top of the Precuyo formation. The oil gravity is 31.1 degrees API. The total well depth was 1050 meters.
All three wells are capable of production but only RN.x-1004 is likely to be in production during the fourth quarter of 2011.
The foregoing well results enable the Company to refine its prospect mapping and to identify other locations where the oil percentages could be higher and the development risk lower. As mentioned previously, these three wells are considered exploration wells. While such wells can produce economically, their primary purpose is to more accurately delineate the parameters and dimensions of the target field so as to optimize exploitation drilling. The resulting information provides essential input for a commercial development plan. In this regard, Americas Petrogas intends to drill additional wells in Rinconda Norte in the near future.
The Rinconada Norte block is currently under an Exploitation concession, which will allow Americas Petrogas and Gran Tierra Energy, with previous approvals from the authorities, to move ahead with development activities in the near term. The Company anticipates building test production facilities in the fourth quarter of 2011.
Commenting on this most recent discovery, Mr. Guimar Vaca Coca, Managing Director of Americas Petrogas Argentina S.A., stated, "We are very excited about these discoveries which will allow us to make commercial developments in a short time and will increase cash flow."
Mr. Barclay Hambrook, President & CEO of Americas Petrogas, stated, "Results of these exploration wells confirm the geological model as well as the upside potential of the Rinconada Norte Block. Three out of three exploration discoveries is a testament to the experience and expertise of our technical team, moving us up the learning curve."
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