The 6% working interest was acquired for US $420,000 and other considerations from Omega Energy's exploration block located in Catatumbo Basin region of northeastern Colombia. The operator of the Carbonera Contract is Well Logging Ltda. Fulfillment of the first Phase contract commitments (Phase 1 re-entry of Cerro Gordo-1) was met prior to the Company acquiring the 6% working interest. Pursuant to the terms of the Contract the Company will participate with drilling one exploration well in each of Phase 2 (12 months - April 28, 2008), Phase 3 (12 months - April 29, 2009) and Phase 4 (12 months - April 28, 2010).
The Cerro Gordo-1 well was originally drilled and abandoned by Texaco in 1989. The well was re-initiated (re-entered) by Well Logging Ltda. in the southern part of the block in June 2007. It was proven productive after a one-week test. The Cerro Gordo-1 well flow tested a combination of gas and condensate at Gas: 4.0 MMCF/Day and Condensate: 60 BBL/Day.
The Carbonera Block
The Carbonera Block encompasses 64,000 acres located northeast of Bogota near the Venezuelan border in the Catatumbo Basin region of northern Colombia. The initial exploration well, Cerro Gordo-1 well, has tested combination of gas and condensate (Gas: 4.0 MMCF/Day and Condensate: 60 BBL/Day). The block hosts a probable reserve of 22 MMBLS.
Catatumbo Basin and Operators
The Catatumbo Basin is a 7350km/sq sub-basin forming the western extension of the Maracaibo Basin of Venezuela, which has produced billions of barrels of oil to date with an estimated total of 20 billion barrels remaining to be produced. In Venezuela this basin has already produced several billion barrels of oil, and individual producing fields there range in size up to more than 800 million barrels of oil recovered to date.
Immediately adjacent to the Carbonera Block lie fields such as Tibu, found in 1940 and with 260 million barrels produced to date, Petrolea, discovered in 1934 with 38 million barrels produced to date, and Rio Zulia, dating from 1962 and with 137 million barrels recovered to date.
Solana Resources Limited holds one block in the Catatumbo Basin, and Ecopetrol with Petrobras holds three licenses in the surrounding area. Solana Resources Limited says that the preliminary test results for the Tres Curvas-1 wildcat exploration well yielded a combined 180 barrels of oil per day (bopd) from 61 feet of perforations in two Catatumbo formation zones. With the application of appropriate artificial lift it is expected that rates will meet or exceed original expectations of 300 bopd.
Fred B. Zaziski, Chairman of PetroSouth Energy, states: "With this latest acquisition, PetroSouth currently has participation stakes in three separate Colombian blocks representing 197,333 acres and potential reserves of 244 million barrels of oil (MMBO) cumulatively."
Juan Carlos Robles, President and CEO of PetroSouth Energy, commented, "We are delighted to participate in the Carbonera Block, which will now add at least another three (3) exploration wells over the next few years to our existing drilling program. We believe that obtaining access to high-quality prospects is the most effective way to acquire new potential reserves and enhance Shareholder value."
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