GEOPARK On Track with 2007 Drilling Program
GEOPARK's drilling program for 2007, which commenced in June 2007, targeted the drilling of up to 8 new wells – representing a mix of development, appraisal and exploration prospects designed to achieve both near term reserve growth and production increases. The 2007 program forms part of a 30 well drilling program due to be completed by the end of 2008.
In Chile, to date, GEOPARK has completed the drilling of five wells: Santiago Norte 4, Pampa Larga 12, San Miguel 1, Pampa 1 and Nika 5. The Pampa Larga 13 development well is currently drilling and the Puesto Ranger 1 well will be spudded during the second half of December 2007. Results of GEOPARK's wells drilled during the second half of 2007 in Chile are summarized below:
- Santiago Norte 4 – Development well, which was drilled and completed with gas tested in the Springhill formation. Following a hydraulic fracture and connection of flow lines, the well is currently producing and selling approximately 0.9 million cubic feet per day of gas. Preliminary interpretation following the hydraulic fracture suggests that a more effective stimulation could deliver higher flow rates from the well. GEOPARK is currently investigating alternative methods to increase the gas production from this well.
- Pampa Larga 12 – Development well, which was drilled and completed with gas tested in the Springhill formation. A flow line was constructed to the nearby production facility and the well is now producing and selling approximately 3.0 million cubic feet per day of gas to Methanex.
- San Miguel 1 – Exploration well, which was drilled and completed with gas tested in the Springhill formation. A flow line was constructed to the new Kimiri Aike Dew Point Plant and the well is now producing and selling approximately 2.2 million cubic feet per day of gas. San Miguel represents a new field discovery, which was delineated following interpretation of the 3D seismic survey completed at the beginning of 2007.
- Pampa 1 – Exploration well that was drilled and completed with gas shows in the Springhill formation. The well is currently awaiting the arrival of a hydraulic fracturing unit to stimulate the reservoir and determine commerciality – with a target schedule of January 2008, dependent upon customs clearance into Chile.
- Nika 5 – Development well that was drilled and completed with oil tested in the Tobifera formation and gas shows in the Springhill formation. The well is currently awaiting the arrival of a hydraulic fracturing unit to stimulate the reservoir and determine commerciality – with a target schedule of January 2008, dependent upon customs clearance into Chile.
- Pampa Larga 13 – Development well, which is currently drilling ahead at 2,940 meters – with a TD of 3250 meters. This is a deviated well being drilled from an existing well-site platform -- resulting in reduced well-site preparation costs, surface facility and pipeline construction needs and environmental impacts.
In Argentina, GEOPARK is completing the drilling of the Campo Leandro 1 exploration well on the Del Mosquito Block in the Austral Basin. Preliminary mud log analysis did not indicate the presence of hydrocarbons in the principal objective. Electric logging will now be performed to further investigate the well's potential.
Other significant events during November 2007 include:
- Closing of a US$40 million gas pre-sale financing with the Methanex Corporation of Canada.
- Commissioning of the new Kimiri Aike Production Facility in Chile, which includes a dew point plant and compressors. This new plant enables GEOPARK to enter directly into the main regional pipeline infrastructure and to rapidly commercialize any new production. Current plant capacity is 24 mmcfpd of gas with a programmed expansion to 35 mmcfpd during the First Quarter 2008.
- Gas prices in Chile for November 2007 were US$ 3.74 per thousand cubic feet (mcf). In December 2007, gas prices will be US$ 4.82 per mcf.
- The Company's Board of Directors approved a US$50 million work program and investment plan for 2008 in Argentina and Chile which includes the drilling of 24 wells, new 3D seismic surveys and further production facility expansion.
- At the Annual General Meeting held on November 19, 2007, the Shareholders approved all outstanding resolutions. These included the approval of the 2006 audited accounts; re-election of Directors; establishment of a new Employee Long Term Incentive Program (including increasing the maximum number of shares for this program from 10% to 12% of the outstanding share capital); and the right to issue up to 10% of new shares in the Company for cash without triggering standard pre-emption rights.
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