The 172 sq km of 3D seismic acquired on the Campo Rico block is currently undergoing enhanced processing. To date, it has been used to evaluate potential drilling locations for both exploration and development wells and the first exploration well, Centauro South No.1, will be drilled in the first quarter of 2006.
Campo Rico Field
The Campo Rico No.1, 2 and 3 wells are currently producing at an aggregate rate of 3,170 bopd. Once the final interpretation of the 3D seismic is completed, the option to drill Campo Rico No.4 for better drainage of the reservoir will be evaluated. If necessary, the well will be drilled later in 2006.
Ecopetrol has advised the Company that it has granted commercial status to the Campo Rico field and exercised its right to back-in for 50% of the discovery. Under the terms of the Campo Rico Association Contract, Ecopetrol will now receive 50% of the production after the deduction of 8% royalty oil and will reimburse Emerald for 50% of the costs.
The construction of early production facilities at the Vigia field is now completed and the Vigia No.1 and No. 3 wells are currently producing 1,095 bopd. The testing and production start-up of the Vigia No.2 well has been delayed due to technical problems with the well. A workover rig will be contracted by the end of this quarter to re-enter this well for remedial work.
Drilling the Vigia No.4 well is planned for the second quarter of 2006, with Vigia No.5 to follow later in the year, should seismic interpretation and reservoir modelling indicate the requirement for another well.
Emerald's in-house estimate for the Vigia field reserves, excluding the potential of the Vigia No.2 drainage area, is 3 mmbbl for proven and probable reserves and 6 mmbbl for proven, probable and possible reserves. It is anticipated that, following the flow test results from the Vigia No.2 well and completion of the enhanced processing of the 3D seismic data, the independent reserve report for Vigia will be completed in time for the announcement of 2005 preliminary results.
Emerald has presented its application for commercial status of the Vigia discovery to Ecopetrol and is currently awaiting its response.
El Algarrobo Block (Operated by Rancho Hermoso)
It is anticipated that drilling of the exploration well Agueda No.1 will commence in February 2006.
The Gigante No.1A well is currently being produced at a restricted rate of 500 bopd. After 5 years of operation and 2 million barrels of oil produced, the production tubing requires replacement. A rig is being mobilised to the well site and the workover is expected to commence within five days. During the workover, a larger capacity pump (ESP) will be installed to evaluate the feasibility of increasing production from the well.
The Silfide No.1 well has been put on test production using a hydraulically operated rod pump and has been produced at 40 bopd. Analysis of seismic, drilling and logging data indicates that the well has penetrated a secondary target and not the primary Lisama target. Ecopetrol has granted the Company a three-month extension to the current exploration period to evaluate an option of drilling Silfide No.2 to appraise the discovery.
Technical Evaluation Agreements (TEA)
The technical studies required under the Mantecal and Altamira TEA's have been completed and presented to Agencia National de Hidrocarburos, the Colombian licensing authority. Emerald currently has no plans to apply for an exploration contract within these areas.
Acquisition of the aeromagnetic survey over Cachama and Las Brisas areas has been completed and the data is currently being processed and interpreted. Existing 2D seismic data will be reprocessed, interpreted and intergrated with the aeromagnetic data.
Saxon, the drilling contractor, is completing the assembly of Rig 223 for commissioning and acceptance testing during January 2006 after which it is expected to be contracted by Emerald to drill three wells with an option for additional wells thereafter.
Total gross production for 2005 was 1.2 million bbl (2004: 0.5 million bbl); average daily production for 2005 was 3,304 bopd (2004: 1,322 bopd). In the fourth quarter of 2005, Emerald achieved an average daily rate of 4,451 bopd (Q4 2004: 1,971 bopd). During eight days in the fourth quarter of 2005, production exceeded 5,000 bopd. Currently, with reduced production from Gigante No.1A and Vigia No.2 shut-in, production is 4,750 bopd.
Alastair Beardsall, Emerald's Chairman, said:
'Our efforts during 2005 have produced solid results on which we intend to build. Continued growth in the Colombian operations together with our commitment to achieving exploration success in Block 26, Syria, will further enhance production and reserves in 2006.'
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