Emerald Energy has provided the following update on operations in Colombia.
Capella No.2 Well Result
Drilling and evaluation operations have been completed on the Capella No.2 well in the Ombu block, and the well has been tested at a total cold flow rate of 345 barrels of oil per day.
Drilling of the well commenced on 1st October and reached its total depth of 3,550 feet on 19th October. The well was located approximately 1.3 kilometres from Capella No.1, the first discovery well in the block, and had the objective of evaluating the Eocene aged Mirador sands that were flow tested at a total rate of 240 barrels of oil per day in the Capella No.1 well.
Hydrocarbon shows were encountered while drilling the target formation, coring operations were conducted recovering approximately 84 feet of reservoir interval, and wireline logging indicated the presence of 163 feet of potential hydrocarbon bearing intervals.
The lower 140 feet of potential hydrocarbon pay was flow tested, uncased in open hole, using a progressive cavity mechanical pump. During this testing over a period of 4 days, the production stabilised at a rate of approximately 145 barrels per day of 10.5 degree API gravity oil with a water cut of approximately 4% which may have been the return of drilling fluids lost to the formation while drilling. The lower open hole section was subsequently isolated with a retrievable bridge plug so that it may be re-entered later.
The upper 23 feet of potential hydrocarbon pay, isolated behind casing, was perforated and flow tested, also using a progressive cavity mechanical pump. During this testing over a period of 2 days, the production stabilised at a rate of approximately 200 barrels per day of 10.5 degree API gravity oil with a water cut of approximately 10% which, again, may have been the return of drilling fluids lost to the formation while drilling.
Following the completion of the flow testing, the bridge plug between the tested zones was removed and the well was configured for longer term production testing with both zones available for production.
The Company has, based on this further encouraging result, decided to drill the Capella No.3 well, the first deviated well to be drilled in the block, with a surface location adjacent to the Capella No.1 vertical well and penetrating the reservoir approximately 340 metres away. The objectives of this well are to appraise the area near Capella No. 1, evaluate the potential to enhance production by using deviated wells that expose a longer reservoir section for production, and may also include the evaluation of thermal recovery methods. Drilling of the Capella No.3 well will commence once the rig has been mobilised to the location and the well is expected to take up to two months to drill, evaluate and flow test.
Amendment to Ombu Farmout Agreement
Emerald and Canacol Energy Inc. have entered into an amendment of the farmout agreement announced on 14th July 2008 such that Canacol's working interest in the Ombu block will be fixed at 10% and Canacol will no longer be able to increase its working interest above this level. Canacol is paying 100% of the cost of drilling, evaluating, and production testing of the Capella No.1 well to earn the 10% working interest in the block, subject to the approval of the ANH, the National Hydrocarbon Agency of Colombia, and will pay 10% of all costs thereafter.
Emerald's Chief Executive Officer, Angus MacAskill, said, "We are very pleased with the results of the Capella No.2 well, demonstrating the presence of oil over 1 kilometre away from the Capella No.1 well and a total cold flow rate of approximately 345 barrels of oil per day, over 40 percent higher than in the Capella No.1 well. We look forward to the results of the Capella No.3 well, the first deviated well to be drilled in the block."
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