The Serafin well #1 is part of the Serafin Gas Development in which PetroLatina has a 50% interest. The project offers early cash flow and is expected to materially increase the Company's revenues from its Colombian operations.
Results of Initial Flow Test
On February 13, 2007 the fourth point of the test (on a 48 hour extended flow rate) was completed through a 40/64" choke with a stable flow rate of 14 million cubic feet per day of gas, a flowing tubing head pressure of 1530 psi and a shut in casing pressure of 1716 psi.
Pressure recorders will remain in place for a minimum of 7 days after the well is shut in and detailed reservoir data will be available between one and two weeks following their recovery.
Based on information available in Colombia, the current regulatory commission for energy and gas ("CREG") gas price for the area in which the development is located is approximately US $3 per thousand cubic feet. The gas is planned to be sold to local industrial users.
Pipeline Tie in
The Company will now commence the design and construction of surface facilities and a 3.5 kilometer trunk pipeline to tie in to the main Colombian gas pipeline infrastructure. Completion of this final part of the project is expected early in the second quarter of 2007 with first commercial gas deliveries planned for late second quarter 2007.
The estimated cost of the development, including the gas pipeline and tie in, is US $1.36 million (US $680,000 net to PetroLatina). The cost of the development will be met from available cash resources.
Greg Smith, Chairman and CEO commented:
"These test results have met our highest expectations and we are now accelerating the required surface development and will commence commercial gas sales as quickly as is possible. The completion of this extremely positive test and the resultant early cash flows that it will generate, coupled with the initiation of the seismic shoot on the Midas and La Paloma exploration blocks, put our company in a strong position to continue our growth in Colombia. We will report in two to three weeks with the detailed test results and reservoir analysis."
Serafin well #1 in the Tisquerama license block in the Middle Magdalena Valley of Colombia is operated by Petroleos del Norte (PetroLatina Energy Plc's Colombian subsidiary).
Work over and Testing
On January 21, 2007 PetroLatina initiated re-entry operations on Serafin Well #1 in the Tisquirama B area of the Tisquirama license located to the north of the PetroLatina operated Los Angeles Field in Colombia.
On February 6th, 2007 the service rig was released and the well prepared for testing operations. Electronic bottom hole recorders were put in place and on February 10th a four-point flow test was commenced.
Detailed Flow Test Data
On February 13, 2007 the fourth point of this test (on a 48 hour extended flow rate) was completed through a 40/64" choke with a stable rate of 14 million cubic feet per day of gas, 9.05 barrels per day of water (field tests indicate that this is the remaining portion of the 76.6 bbls of load water to recover following the work over), a flowing tubing head pressure of 1530 psi and a shut in casing pressure of 1716 psi giving an estimated draw down of 5%. (Note this draw down is based on a highest recorded surface shut in pressure of 1806 psi prior to the initial flow of the well. Using shut in tubing pressures for initial calculations, it shows a draw down of 15.3%, 10.3% of which being a friction drop as the gas flows up the tubing).
The discovery was drilled by Texas Petroleum in 1991. The target Palaeocene Lisama sands were absent but the well encountered an 18 feet thick gas bearing sand in the Miocene Real Group. Log analysis indicates 18 feet of pay with a porosity of 28% and a water saturation of 27%. The sand was tested from 4,582 to 4,598 feet and flowed up to 16.0 million cubic feet of gas a day on extended tests. Reservoir pressure is 1,978 psi and the gas is over 97% methane. The gas was considered to be most likely of biogenic origin and has accumulated in a stratigraphic trap. The well was abandoned after significant gas flow was recorded but a lack of a gas infrastructure and low local gas prices at that time made the well uneconomic.
Gross reserves estimated from material balance calculations and volumetrics vary from approximately 4 to 8 billion cubic feet of gas recoverable (2 to 4 billion cubic feet net to PetroLatina).
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