The Company owns a 70% interest in an 845,000 acres hydrocarbon concession, which was granted by the Nicaraguan government in March 2004. The concession, which is on the Pacific margin of Nicaragua, extends from approximately 40 kms west of Managua to the Costa Rican border.
Commencing in May, several field programs have been conducted by the Company within the concession boundaries. The exploration objectives were designed to accomplish rapid and relatively inexpensive delineation of drilling prospects in obvious structures. Activities included detailed field geology, surface core sampling for reservoir analysis and geological modeling for drilling locations.
Initial exploration has focused on approximately 36 sq miles in the San Cayetano area in the NE section of the concession. San Cayetano constitutes the area of initial interest due to certain obvious structures that are coincident with multiple oil and gas seeps, which occur on surface.
The data and information obtained to date identifies several exploration targets, which are associated with a NW/SE trending horst structure that may be associated with the regional tectonic event that caused the central Nicaraguan depression. Of interest to the Company are potential reservoirs in both the Masachapa and Brito formations that demonstrate slope facies channel sands and in the turbidite inter-bedded sand facies. Closures on both the NW and SE ends of the horst have been identified.
The source rocks are the lower Rivas formation black shales and the shales in the Brito formation. Good seal rocks are observed in both the siliceous tight deformed sands occurring in massive sand bodies and the tuffaceous silts and shales found in the turbidite sequence. Porosity measurements from core sample analysis indicate an average porosity of 22% in the Masachapa formation and an average of 10% in the Brito.
Although more work is required, geometric compartments within the horst could contain 5000 to 9000 acres in the Masachapa and Brito formation reservoirs respectively.
The Company has identified additional exploration targets, which are currently being examined. The fall work objectives include the completion of the Company's environmental impact review and submission to the Nicaraguan government. The Company will also conduct concentrated seismic surveys over the horst structure to accurately determine drilling locations.
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