PetroMagdalena Energy Corp. provided an update on its ongoing exploration program previously announced on January 18, 2012, and provided a production update for a new discovery on the Arrendajo block.
Luciano Biondi, Chief Executive Officer of the Company stated, "We continue to make substantial progress with our first quarter exploration program. The result from the discovery at Azor is very positive. The incremental production we have from this well underpins our cash flow and provides the financial support that will allow us to expand our 2012 work program. The new Azor-1X well adds 587 bopd to our gross working interest production. We have also made good progress on our exploration program with intermediate casing set on the Santa Cruz-1X well, logging and casing the Cernicalo-1ST well and the Arrendajo Norte-1X well just south of the Azor discovery will reach total depth by the end of the week. As previously indicated, the first quarter incorporates intensive drilling activity."
Azor-1X production test
The Azor-1X well has been completed and was put on production on January 31, 2012. The well produced at a stable rate of 1,181 bopd, 0.3 percent water cut and a well head flowing pressure of 270 psi, natural flow with a 20/64th of an inch choke over the first 12 hours. The choke was then changed to 16/64th of an inch and the well flowed at a stable average rate of 870 bopd with a wellhead flowing pressure of 290 psi of natural flow and a 0.3 percent water cut over a continuous 6-day period. This results in 587 bopd gross working interest for the Company.
The Azor-1X well was spudded on December 24, 2011 and discovered the Azor field on the Arrendajo Block, north of the Cubiro Block in the Llanos Basin and on January 17, 2012, PetroMagdalena initiated production testing on the C5 sand with the announcement on January 18, 2012 that the zone was tested at 752 bopd of 35.5 degrees API oil with 1 percent -BS&W. The final permit allowing for permanent production is currently in process.
The Azor field is located on the Arrendajo Block in the Llanos Basin, where the Company has a 67.5 percent working interest, subject to ANH approval.
Arrendajo Block, Llanos Basin: Arrendajo Norte - 1X Exploration well
After drilling the discovery well, Azor-1X, the drilling rig has moved to another location on the Arrendajo block, Arrendajo Norte-1X, where the rig spudded on January 28, 2012 and has completed drilling to 588 feet (MD), after logging, the surface casing has been run and cemented. It is anticipated that the well will reach the projected TD of 7022 feet (MD) by February 10, 2012 to test the Carbonera sequence that was successful in the Azor-1X well, which is located 9,842 feet (3 kilometers) to the north.
Cubiro Block, Llanos Basin: Cernicalo - FIRST Exploration well
The Cernicalo-1ST well on the Cubiro Block has been drilled to a TD of 6,792 feet (MD) and has completed electric logs. Based on these results, 7-inch production casing has been run in the well to total depth and plans are in place to complete and production test the Guadalupe and C7 Carbonera Formations. Results from the completion and testing program are expected before the end of February 2012. PetroMagdalena has a 70 percent working interest in the Cernicalo-1ST well and is the operator of the Cubiro Block.
Santa Cruz Block, Catatumbo Basin: Santa Cruz -1X Exploration well
After spudding the Santa Cruz-1X exploration well on November 20, 2011, intermediate casing of 9 5/8 inch was set at 9,533 feet MD and drilling has progressed to 10,580 feet MD. It is expected the well will reach TD before the end of February 2012. This well is being drilled adjacent to the Rio Zulia field.
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