Colombia - Exploration and Development
Since September 2006 the Company has been awarded four exploration and production contracts (Maranta, Ombu, Helen and Jacaranda) by the National Hydrocarbon Agency of Colombia ("ANH"). Exploration activities are now focused on these four new areas as prospectivity has been identified on each and the ANH contracts include improved fiscal terms. Seismic acquisition is planned to commence during the third quarter of 2007 prior to potential drilling activity in 2008.
Drilling of the Aureliano No. 1 exploration well on the Fortuna block was completed in late January, with the target La Luna limestone formations being encountered as forecast. An extended phase of production testing has been conducted, including the use of a workover rig for perforation and acid stimulation. Following these operations, a flow rate of 10 bopd of 25 degree API gravity oil has been established. The recovery of oil confirms the presence of hydrocarbons but the low flow rate indicates that communication with a fracture network has not been established. A detailed study of the data acquired during the drilling and testing of the well is being undertaken to determine the future potential of the well and the Aureliano accumulation.
A re-entry program for two wells in the abandoned Totumal field to the south of Aureliano is being prepared, with the aim of determining the potential to recommence production from the field. The Totumal field produced 0.8 million barrels from the La Luna formations prior to abandonment in 1993. It is anticipated that data from these re-entries will also assist in the interpretation of information from the Aureliano No.1 well.
A fracture stimulation was conducted in May 2007 on the Silfide No.1 well in the Fortuna block. The well had been shut-in since the middle of 2006 due to a mechanical failure of the downhole pump. The well is cleaning up after the operation and a flow rate of 35 bopd, a modest increase over the pre-workover rate, has been established.
The Campo Rico No.4 development well commenced drilling in April 2007 in the Campo Rico field. The well is located to recover reserves from the Mirador formation in the north of the field that would not be recovered by the existing 3 producing wells. The Campo Rico No.4 well was drilled to a depth of 10,880 ft and logged hydrocarbon in the Mirador formation. The drilling rig has been demobilized from the location and a workover rig is being mobilized for completion operations. A pipeline is being constructed between the surface location of the well and the Campo Rico field production facilities. First production from the Campo Rico No.4 well is planned to take place prior to the end of June 2007. Under the commerciality status granted by Ecopetrol for the Campo Rico field development, the drilling and pipeline costs are shared with Ecopetrol on a 50/50 basis, as is future production from the well.
The Centauro Sur field development was awarded commerciality status by Ecopetrol in May 2007 and joint operations commenced. The reimbursable costs on this field have been recovered, and future costs and production for this field are now shared with Ecopetrol on a 50/50 basis.
Colombia – Production
Daily gross production for the first quarter of 2007 averaged 3,508 bopd, compared to 3,586 bopd achieved in the fourth quarter of 2006. Production in April 2007 averaged 3,821 bopd following a number of successful well intervention operations during the first quarter.
In the Campo Rico field, a workover was conducted in the Campo Rico No.1 well to replace the hydraulic jet pump with an electrical submersible pump, re-perforate an existing producing zone and add perforations in a new zone, resulting in an increased production rate of 160 bopd.
In the Vigia field, workovers were conducted in the Vigia No.1 and No.3 wells. In the Vigia No.1 well, the Gacheta formation was isolated and the electrical submersible pump was reconfigured to improve its performance and in the Vigia No.3 well, the Une formation was isolated the Gacheta re-perforated. Production from the field was increased by 210 bopd as a result of these workovers.
Syria, Block 26 – Exploration
The Khurbet East No.1 exploration well was spud in mid-February 2007 on the Khurbet East prospect, a fault-bound structural culmination, with closure mapped at several potential reservoir levels including Cretaceous, Triassic and Palaeozoic ages. The Khurbet East prospect is located approximately 12 kilometers southwest of the Souedieh oil field and 12 kilometers south of the Roumelan oil field.
Hydrocarbon shows were encountered while drilling the Tertiary Chilou and Cretaceous Massive formations. Wireline logs indicated a gross hydrocarbon interval of 31 meters and a net hydrocarbon interval of approximately 22.5 meters in the Massive formation. The presence of hydrocarbon in the Massive formation was confirmed by a wireline formation sampler, which retrieved a sample of 21 degree API gravity oil to surface. Wireline logs indicated a potential net hydrocarbon interval of approximately 26.4 meters in the Chilou formation of which some 19 meters are contiguous in the top of the Chilou 'B' formation. A wireline formation pressure sampler could not be run to confirm the presence of hydrocarbon in the Chilou formation as the sampler tools available were not suitable for large diameter well bores.
The well has reached a total drilling depth of 3,800 meters. Wireline logging indicated additional potential hydrocarbon intervals in the Triassic formations. Several intervals have been identified in the well for potential production testing which is expected to commence shortly. However, there is a possibility that the shallow zones may not be production tested in this well due to a combination of the mechanical configuration of the shallow casing strings and the rig availability, which may require the Crosco 602 rig to be demobilized from the Khurbet East No.1 location prior to testing all the intervals identified for potential production testing. Any intervals not tested in this well may be production tested at a later date using a workover rig.
Immediately after completing operations on Khurbet East No.1, the Crosco 602 rig is planned to drill an appraisal well, Khurbet East No.2, on the Khurbet East prospect, with the main objective of appraising and testing the potential hydrocarbon accumulations in the Chilou and Massive formations. This well will also complete the minimum work obligation for the initial exploration phase in the block.
Angus MacAskill, Emerald's Chief Executive Officer, said:
"We are very pleased with the enhanced production in Colombia following workover activities, and look forward to additional production from the latest Campo Rico development well. In exploration, we are very encouraged by progress with the Khurbet East No.1 well in Syria and look forward to further activity both in Syria and in the new contract areas in Colombia."
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