Dana Coffield, President and CEO, stated, "Gran Tierra Energy has attained extraordinary oil reserve growth in the first half of 2007 as a result of our operated drilling activity. We believe these results affirm our strategy of acquiring underdeveloped lands and adding value by drilling. In the last two years, since inception of Gran Tierra Energy, our focus has been on identifying and acquiring underdeveloped lands; our focus in 2007 has been on developing these lands by drilling. As a result, we have now more than tripled our acquired proved, probable and possible oil reserve base and almost doubled our acquired proved oil reserve base by executing our drilling program in the first half of 2007."
The discovery of the Costayaco field in the Chaza Block, located in the Putumayo Basin of Colombia and operated by Gran Tierra Energy, was the result of drilling the Costayaco-1 exploration well in the second quarter of 2007. GCA has evaluated the well data and associated geoscience data, and has allocated to Gran Tierra Energy proved reserves of 3.0 million barrels of oil, with additional probable reserves of 6.0 million barrels of oil, and additional possible reserves of 8.2 million barrels of oil (all net after royalty).
The discovery of the Juanambu field in the Guayuyaco Block, also located in the Putumayo Basin of Colombia and operated by Gran Tierra Energy, was the result of drilling the Juanambu-1 exploration well earlier in 2007. GCA has evaluated the well data and associated geoscience data, and has allocated to Gran Tierra Energy proved reserves of 0.1 million barrels of oil, with additional probable reserves of 0.3 million barrels of oil, and additional possible reserves of 1.1 million barrels of oil (all net after royalty).
The Puesto Climaco-2D sidetrack well in the Vinalar Block, located in the Noroeste Basin of Argentina, tested a deeper undeveloped reservoir beneath the existing Puesto Climaco field at the beginning of 2007. Gran Tierra Energy internally evaluated the well data and associated geoscience data, and has reallocated reserves associated with this well from existing proved undeveloped reserves to new proved producing reserves. This reallocation does not impact total proved reserves.
In the first half of 2007, Gran Tierra Energy has produced approximately 206 thousand barrels of oil, net after royalty, reducing its proved producing reserves reported at December 31, 2006 by that amount. Incorporating oil produced and adding the new reserves reported above, Gran Tierra Energy's estimate of proved reserves, net after royalty, as of June 30, 2007, stands at 5.9 million barrels of oil, with additional probable reserves at 7.5 million barrels of oil, and additional possible reserves of 12.2 million barrels of oil, for a total of 25.6 million barrels of proved, probable and possible oil reserves. This contrasts to Gran Tierra Energy's December 31, 2006, proved reserves of 3.0 million barrels of oil, probable reserves of 1.2 million barrels of oil, and possible reserves of 2.9 million barrels of oil, or a total of 7.1 million barrels of proved, probable and possible oil reserves.
Production for the first half of 2007 has been stable, averaging 1,140 barrels of oil per day, net after royalty, as a result of successful well workovers and production from Puesto Climaco-2D. Gran Tierra Energy has begun initial production from testing and production optimization programs at Juanambu-1 and Costayaco-1. Gran Tierra Energy expects production to grow through the balance of 2007 and into 2008. The new oil production is currently being trucked to existing production facilities.
New field development planning is in progress for the Costayaco and Juanambu fields, and is expected to continue into early 2008. This planning will include the design of oil processing facilities, oil transportation requirements, and field development drilling requirements. Gran Tierra Energy has currently scheduled two additional wells for the Costayaco field, with the objective to increase early production capacity and to further delineate the size of the oil accumulation in the field. Drilling is to begin in the fourth quarter of 2007.
Dana Coffield continued "Our immediate attention going forward will be to develop these new reserves by converting them into production and cash flow in the coming years through additional drilling and infrastructure development. Simultaneously, we are continuing to add additional underdeveloped lands to our base and developing additional exploration drilling opportunities. The balance of 2007 and 2008 will see a mix of both development drilling and exploration drilling in our portfolio, in contrast to the activity of the first half of this year, which was focused on exploration."
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