In San Alberto-1X Gold drilled 2,300 feet of Palaeozoic and because of severe wear on the drilling equipment it was agreed with Perupetro to stop drilling at 5,113 feet, 135 feet short of the obligation in our Block XXI license. The original plan was to drill to 6,500 feet but because of the geology encountered in the well Perupetro agreed with our view that at 5,113 feet the well had more than adequately evaluated the Palaeozoic.
The well was logged and some 250 feet of potential hydrocarbon bearing Palaeozoic sands were interpreted by our specialists using their experience and Schlumberger software. 90% of the hydrocarbons are in a single zone below 4,570feet with formation water below it.
Given the experience of San Pedro it was decided to test the well "bare foot". The drilling rig was moved off the location and a workover hoist moved on together with tanks and testing equipment. To reduce the bottom-hole pressure, and so allow the well to flow, completion fluid was swabbed out of the well and the well flowed highly saline formation water at 960 bwpd. We believe that this water is flowing from the zone below the hydrocarbon zone and is preventing any flow of hydrocarbons from above the water zone.
We need to pull the uncemented slotted-liner so that we can shut off the water and definitively test the hydrocarbon leg. Discussions with the contractor are in hand to mobilize appropriate equipment to the well site.
Once the Palaeozoic test is complete we will test the higher Verdun sands which have some 315 feet of potential hydrocarbon bearing sands in both the equivalent gas producing Upper Verdun sands in the nearby Las Casita field and the deeper thicker Verdun sands that are not present in Las Casita.
The technical information contained in this announcement has been reviewed and approved by Mike Burchell, B.Sc., 66, member of the SPE and with over 44 years experience in the oil and gas business.
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