Since the company's last update release in mid-August 2007, the company has drilled, tested and completed four wells on the Puesto Morales Block and two more wells on the Rinconada Block. The best well on the Puesto Morales Block was the 1044 well, which tested at an initial flow rate of approximately 2,000 bbl/d of light gravity crude and is currently onstream, flowing at a rate of approximately 1,050 bbl/d. The 1033, 1042 and 1043 wells are also oil producers at current or anticipated rates of approximately 200 bbl/d, 475 bbl/d and 500 bbl/d, respectively.
Petrolifera has also drilled or is drilling additional wells, 1031, 1036 and 1037 at Puesto Morales. Two of these wells, 1036 and 1037, were originally scheduled as water injectors to be utilized in the company's planned waterflood on the northern lobe at Puesto Morales. However, the 1036 well encountered approximately nine meters of Sierras Blancas oil pay and accordingly will be tested and likely completed as an oil producer. A replacement injector will now be drill downdip from the 1036 well. The 1031 well is presently drilling.
Recently, Petrolifera has had three rigs working at Puesto Morales. As was previously indicated, one of these rigs has now been released back to another operator active in the region. However, the Quintana Rig No. 13, which arrived from China in the past while, has substantially been relocated to a staging area in Neuquén Province and is expected to be available to Petrolifera before the end of September 2007.
A new drilling rig and two service rigs (including the converted Quintana truck-mounted Rig No. 3) are now operating on the Rinconada drilling program. In the past month, the 1006, 1029 and 1005 wells have all been drilled, logged and cased. Testing programs are planned or underway. The company continues to be enthused about the prospects at Rinconada, especially in light of the fact the 1029 well encountered oil and is situated some seven kilometers southeast of the initial discovery made at the Ra-1001 well, raising the possibility of considerable areal extent to the play. Further results will be released upon completion of testing programs. The next well to be drilled at Rinconada is 1011, situated approximately one-half mile south of the 1001 discovery well.
Construction and completion of the company's facilities at Puesto Morales is proceeding on schedule, despite some minor delays related to the shortage of natural gas to industrial companies during the winter months in Argentina. This slowed down the delivery of certain component parts for the high-pressure natural gas pipeline to Medanito, which is now expected to commence operations on September 20, 2007 once low-pressure pipeline connections are completed. High-pressure connections and compression will now be operative around mid-November 2007. Final completion of certain of the company's water treatment facilities and water injection scheme will also be delayed by several weeks for the same reason and are expected to be substantially operative by mid-October 2007.
Elsewhere in Argentina, the company has been pre-awarded the Puesto Guevara Concession by the government of the Province of Rio Negro, Argentina. This block, which encompasses 171,520 acres (670 sq. kilometers), is on trend with and contiguous with the Vaca Mahuida Concession southeast of the Rinconada Block. Petrolifera was the sole bidder on this block at a recent Rio Negro sale of oil and natural gas rights. Upon formal award, Petrolifera as to a 100 percent working interest will be committed to reprocessing existing 3D seismic coverage on the block, to shooting 100 square kilometers of new 3D seismic, and to the drilling of one 2,000 meter well within the first three years of the award date.
In Peru, the company's 2D 800-kilometer seismic program on Ucayali Block 107 is underway. The company is also evaluating various alternatives to secure a drilling rig or rigs for its proposed 2008 program on both its 100 percent-owned Ucayali Block 107 and on the Maranon Block 106.
In Colombia, formal awarding of the Sierra Nevada II TEA is anticipated in the next several days. In the interim, Petrolifera's technical staff is gathering and assessing all relevant data for the Sierra Nevada I License and the Turpial TEA.
Petrolifera Petroleum Limited is a Calgary-based crude oil and natural gas exploration, development and production company. It is active in the Neuquén Basin, Argentina; in the Maranon and Ucayali Basins onshore Peru; and holds concessions onshore Colombia. The company's shares are listed for trading on the Toronto Stock Exchange under the symbol PDP.
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