The agreement encompasses the acquisition of a 20% working interest in and rights to explore and produce hydrocarbons in the Middle Magdalena Valley's Bosques Block where the Company intends to reactivate and maximize the Bosques Block's known production. Plans include testing and producing from the play's substantial untapped reserves. Management notes that the positive findings of a third party reserve assessment conducted by Boulder, Colorado-based Gustavson Associates were instrumental in Management's decision to move ahead.
Gustavson Associates has estimated that 1,100,000 gross barrels of proven oil reserves remain to be produced from a field on the block currently defined by two recently shut-in wells. Of these proven reserves, 550,000 barrels are classified as proved non-producing and 550,000 barrels classified as proved undeveloped.
Company President, G. Leigh Lyons comments, "Projects like the Bosques Block, and for that matter Huaya Block 100 in Peru, do not just happen. It takes a dedicated management team, executing a good, unique corporate strategy to identify, negotiate for, and acquire them. The Bosques Block is our first project in Colombia, and we are already working on several more exciting projects, one of which we have already received a reserve assessment on from Gustavson Associates, and based upon which we have decided to continue negotiations. We look forward to starting re-entry activities on the wells in the Bosques Block in early first quarter of 2007, and prior to that bringing you the news of the results of the Huaya 100-1X well."
In related news from the Huaya 100-1X drilling operation in Peru, Radial Energy wishes to advise that shortly after reaching a depth of 235 feet and setting surface casing, the operator advised Management that field operations require a pause needed to effect repairs to failed surface equipment. Due to the remote location and impaired condition of both primary and backup hydraulic apparatus, it was determined to ship the equipment to a Lima, Peru facility where repairs will be performed. Upon repair, the assembly will return to the site via expedited means. The operator reports that the hole is in excellent condition and drilling operations will recommence immediately upon return of the equipment.
According to a reserve assessment conducted by Gustavson Associates, the well will test for trapped oil reserves, including 15.3 million gross barrels of oil classified as Proven Undeveloped. The Company plans to reach a target depth of approximately 950 feet within 3 to 5 days upon recommencement of operations at which point logging and testing activities will begin.
The Company further wishes to note that due to a communications error, the press release of November 20th inaccurately indicated the depth of the well at 250 feet. The correct depth is 235 feet as reported November 27th. Management will provide further updates as they become available.
Radial Energy identifies, acquires and develops low risk oil and natural gas exploration and development opportunities throughout the Americas. The Company's strategy involves targeting overlooked or under-developed reserves that are under the radar of multinational oil companies and out of the reach of small independents.
Radial Energy has rapidly assembled a portfolio of oil and gas plays including working interests in two separate oil and gas prospects located in Cherokee County, Texas, as well as in the Block 100 oil project located within the Huaya Anticline area in the Ucayali Basin of eastern Peru. The Company has also executed a Letter of Intent to acquire rights to explore and develop oil reserves on the Bosques Block play located in the prolific Middle Magdalena Valley of Colombia. The Company targets prospective oil and natural gas opportunities in historically productive regions with a primary focus on identifying previously drilled but undeveloped exploratory wells that, due to factors at the time of initial drilling including the absence of pipeline infrastructure, lack of modern recovery technology, poor geological or engineering interpretation or low oil and gas prices, were not fully exploited.
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