The first stage of development is being implemented at the new Costayaco oil field in the Chaza Block, located in the Putumayo Basin of Colombia. Production with natural flow has averaged approximately 1,748 BOPD gross (788 BOPD net after royalty) since September 10, 2007 from selected reservoir zones in the discovery well Costayaco-1.
This production is currently being transported by truck to existing facilities. A ten kilometer eight inch pipeline is being designed to replace trucking operations. This pipeline is expected to have a physical capacity of up to 25,000 BOPD to handle any new production from future development wells, although the initial throughput will be limited to existing infrastructure capacity, which is estimated at 5,000 to 6,000 BOPD. This pipeline is expected to be operational at mid year 2008.
Two development wells are currently planned for the Costayaco field, with drilling to be initiated late in the fourth quarter of 2007 and continuing into 2008. A new 3-D seismic acquisition program encompassing 70 square kilometers over the field has been initiated and is expected to be completed in the fourth quarter of 2007. The results of this seismic program will be used to plan development drilling in 2008. A second stage of additional development drilling and infrastructure construction will be contingent on the results of these initial wells.
A staged development program is also being implemented for the new Juanambu oil field in the Guayuyaco Block, located adjacent to the Chaza Block in the Putumayo Basin of Colombia. Early production testing has been completed and the application process for commerciality is continuing. The construction of a six kilometer six inch flowline is being planned to transport oil from the Juanambu-1 discovery well to existing infrastructure and should be operational in late fourth quarter of 2007. A second stage of development drilling and infrastructure construction is being evaluated for 2008.
Since September 10, 2007 Gran Tierra Energy's production in Colombia has averaged approximately 1,491 BOPD, net after royalty, and production from operations in Argentina has averaged approximately 543 BOPD. Gran Tierra Energy's 2,034 BOPD net after royalty average production for this period is up from 1,140 BOPD average for the first half of 2007.
Dana Coffield, President and CEO, stated "My objective of attaining a 2007 exit rate for Gran Tierra Energy in excess of 2,000 BOPD net after royalty has been attained three months ahead of schedule. Gran Tierra Energy's work program focus is now transitioning from exploration to development activities, which are intended to continue our production growth into 2008. These development programs will be complemented by continued exploration activity in our three countries of operations through 2008."
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