Amerisur has posted its unaudited results for the six months ended September 30, 2008, including an operations update for its South American assets.
Giles Clarke, Chairman of Amerisur Resources said, "We have continued to make significant progress during the period. Our main focus is now on our core area of Colombia where production testing is in progress and we continue to believe there is significant value to be realized from our operations.
"Additionally, the Board was delighted by the appointment of Amerisur as Operator of the Platanillo contract and our qualification as unrestricted Operator for the purposes of the Mini-Ronda 2008 is a further indication of the ongoing development of your company.
"During the period we have continued to focus the business on three priorities - generating cash flows, delivering production and increasing our exposure to low risk, high impact prospects. It is an exciting period ahead and our outlook for the Company remains positive."
During the reporting period the Company was appointed Operator of the Platanillo contract in Colombia, as ratified by the Agencia Nacional de Hidrocarburos (ANH), the contract governing body. The partners decided that this would bring economic benefits that will help to facilitate the evaluation of the block. We are pleased to report that the change has enabled us access a reduced cost base, even in this period of high service costs for the industry.
The long-term testing operations of Alea-1R well, which had been suspended in February 2008, recommenced on 27th July following the installation of upgraded facilities. Platanillo-2 recommenced on August 5. Those facilities were approved by Ministry of Mines and Energy (MNE) to perform a Long Term Test until at least the end of the current evaluation period,
The Company is pleased to report that progress has been seen at Alea-1 and Platanillo-2, which have both been tested individually and simultaneously under both natural flow and with artificial lift conditions. For initial results of those tests we refer you to the Regulatory News Service release of October 22, 2008. The wells are currently closed in to perform an extended Pressure Build Up (PBU) test, so the current, temporary suspension of export facilities in the Putumayo basin has not impacted operations.
The current evaluation period terminates on January 9, 2009. The Company is preparing the evaluation report which must be submitted to ANH by April 8, 2009. That report will consider the entire data set acquired to date and will be used as a basis for recommendations relating to the future development of the contract, i.e. the commerciality status of the field. Having been operator at Platanillo for five months, the Board continues to believe that there is significant potential within this block and are applying all efforts to turn these discoveries into commercial production.
Additionally, the Company announced on September 30, that it had closed the acquisition of the 35% participation in the Platanillo block held by Repsol Exploracion Colombia in the contract. As a result, Amerisur now holds a 60% working interest through its subsidiary, Amerisur Exploracion Colombia under the Platanillo Exploration and Production Contract with the ANH. Ecopetrol S.A holds a 40% interest.
Lastly, we were pleased to announce that since the period end the ANH qualified Amerisur Exploracion Colombia, a wholly owned subsidiary of the Company, as an unrestricted Operator for the purposes of the Mini-Ronda 2008. The Mini-Ronda was a competitive bidding round for blocks located in 5 sedimentary basins in Colombia. The qualification demonstrates our growing maturity as an operating company in Colombia. After detailed analysis of the technical data in all the basins offered, and a review of the contractual terms within the framework of current industry conditions, the Company did not make application for any block within the Mini-Ronda. The Mini-Ronda was closed on December 4, with the result that 42 from 102 blocks were bid upon.
The Company continued its technical analysis of the structures within the Fenix area and has been very encouraged by the results. These analyses indicated the existence of a further prospect in the block, the refinement of already identified prospect and the upgrading of one lead to prospect. Hence three exploration prospects and one exploration lead are now considered to represent the potential of this block.
The prospects comprise an up-dip target from proven oil in the La Tigra area, together with 2 similar sub-thrust prospects further to the north.
The lead, which requires further 2D seismic to define its structural closure is a structure of a type analogous to the Bonanza field which lies 6km to the north of it.
The total estimated potential resources of these structures is in the range 47 to 280 MMBO.
In October, the Company initiated a farm-out process for Fenix. To date 9 oil and gas companies have expressed interest in the project and have been given access to detailed information. Current market conditions tend to complicate any exercise of this kind; however we expect that final negotiations will be held during Q1 2009, with drilling of the first well during Q2 2009, subject to rig availability.
In both contracts in Paraguay, San Pedro and Curupayty, technical review work has continued during the period, supported by field cartographical and Right of Way surveys. The Company has decided to farm out or otherwise reduce our participation in these blocks, in order to concentrate on our core area of Colombia. Initial discussions are underway with an interested party.
In Colombia, the current evaluation period for the Platanillo block which terminates in January 2009 will provide further clarification as to the commerciality of the field. On the Fenix block we expect final negotiations with farm-out partners to be held during Q1 2009 with drilling of the first well during Q2 2009.
Additionally, we expect to further progress technical review work in Paraguay and farm out or otherwise reduce our participation in both our contracts.
Our focus is now on our core area of Colombia where we are looking to develop an income stream and access further attractive opportunities to use our significant cash resources to enhance our portfolio. In the current climate of depressed oil prices but also falling operational costs, we expect that we can make significant progress with our strategy of focussing on low risk, near term projects. We look forward to updating shareholders on further exciting developments as our strategy develops over the second half of this financial year.
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