Following the construction and installation of a new gas plant in the Fell Block, GeoPark has initiated production at a rate of approximately 3.2 million cubic feet per day (mmcfpd) of gas and 50 barrels per day (bpd) of condensate -- representing approximately 580 barrels of oil equivalent per day (boepd).
Santiago Norte 1 is the first well from the Santiago Norte Field that has been put into production, and GeoPark will begin further drilling in the Santiago Norte Field during the First Quarter 2007 to develop existing reserves and contingent resources. GeoPark has contracted a drilling rig for three years (with a 2 year extension option) that is currently being transported to Chile for arrival in January 2007. GeoPark also owns a 50% interest in a workover rig that is presently operating in the Fell Block on a multi-well rehabilitation program. GeoPark is also carrying out a US$8 million 3D seismic program over the Fell Block with its completion scheduled for January 2007.
GeoPark is the only private sector-oil and gas company operating in Chile. Since May 2006, four gas and condensate fields have been put into production on the Fell Block by GeoPark. Fell Block gas production is sold to Methanex (the world's largest methanol producer) at its plant in Punta Arenas, Chile, and the crude oil is sold to ENAP (the State Oil Company of Chile).
GeoPark holds a 100-percent interest in three hydrocarbon blocks in Argentina and one hydrocarbon block in Chile. The blocks together cover an area over 700,000 acres. Total current production from the four blocks is approximately 1,600 boepd. A workover program on the Monte Aymond field in Chile, currently underway, is targeted to bring four wells on production during First Quarter 2007. An operational update will be issued during the First Quarter 2007.
GeoPark's 2007 work program includes well rehabilitation projects, infrastructure and processing plant construction, development drilling and exploration drilling. The required equipment, rigs, plants, and permits for these projects are either already on-site or have been secured.
DeGolyer & MacNaughton, independent reserve engineers, appraised the hydrocarbon assets of the Company on these blocks (as of December 31, 2005) to be: 29.3 million boe of proved and probable reserves; 27.9 million boe of possible reserves; 48.3 million boe of contingent resources (best estimate); and 39.2 million boe of prospective resources (best estimate).
New Capital Funding
GeoPark has executed a US$20 million loan facility with the International Finance Corporation (IFC), the private-sector arm of the World Bank Group. The purpose of the loan is to supplement current cash reserves and accelerate GeoPark's 2007 and 2008 investment program to develop its oil and gas reserves in Chile and Argentina. Disbursement of funds is expected to occur during the end of this year or January 2007. The IFC of the World Bank is also a GeoPark equity shareholder.
Commenting, Gerald E. O'Shaughnessy, Chairman of GeoPark, said:
"The addition of the first well in Santiago Norte Field to our production stream is an important step in our efforts to rehabilitate existing shut-in fields on our block in Chile. With the arrival of our drilling rig during January 2007, the company will begin to further develop existing Santiago Norte reserves and add additional proved reserves from known hydrocarbons resources currently categorized by DeGolyer & MacNaughton, independent reserve engineers, as 'contingent resources.' We are also pleased to execute the loan facility with the IFC, which will be utilized along with funds raised from our public listing in May 2006, to enable GeoPark to more aggressively develop its oil and gas assets in Chile and Argentina. The IFC loan also demonstrates IFC's continued commitment to and confidence in our Company, people and performance."
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