The Serafin gas accumulation was discovered in the early 1990s and tested at flow rates of up to 16 million cubic feet of gas per day. Recent increases in the price of gas in Colombia to $2.50 / $3 per thousand cubic feet mean the project offers strong short term cash flow and economic returns, with projected pay back in 5 months. The first commercial deliveries of gas are expected in the second quarter of 2007. The revenues from this project are expected to increase PetroLatina's annual cash flow substantially from its Colombian operations.
Based on the above test rates and pressure data, gross reserves are estimated between 4 and 8 billion cubic feet of biogenic gas. The plan is to re-enter and work over of the well in January 2007.
PetroLatina believes there could be additional similar biogenic gas accumulations on the license and is currently conducting studies using its existing 3D seismic coverage to identify further drillable prospects.
PetroLatina has a 50% interest in the project.
Nicholas Gay, PetroLatina's President and CEO, commented:
"The initiation of the Serafin Gas accumulation is a key milestone in the company's development. We are now firmly focused on Colombia where we already have a revenue stream from oil production of approximately 500 barrels of oil a day and pipeline tariff income. The Serafin gas development has proven test rates and will provide the company with additional early cashflows as well as substantially increasing our revenues from Colombia. Management is pleased to see the company moving ahead as planned and we are excited about the further developments over the coming months."
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