PetroLatina has announced that the preliminary engineering analysis for its Colon-1 exploration well on the La Paloma block in the Middle Magdalena valley, Colombia has now been completed. The preliminary analysis indicates that this new field discovery has significant potential in terms of the expected production rate and the volumes of oil discovered. The Company retains an 80% working interest in the Colon-1 well and is the operator.
As announced on February 18, 2009, the Company discovered 22 degree API oil in a new reservoir, the Cretaceous Umir sand at the Colon-1 well. The Umir formation in the Middle Magdalena valley has not previously been tested in this area, and was encountered between 8,755ft and 8,795ft. The Colon-1 well flowed approximately 1,200 barrels of oil per day ('bopd') at a stabilized rate on a test extending over 99 hours.
Petrophysical analysis of the well conducted by independent experts indicates that the porosity of the oil bearing reservoir is approximately 24% and that the oil saturation is approximately 72%. The calculated pay in this zone is approximately 40ft of which 29ft was perforated for the tests conducted. The formation volume factor of this oil is approximately 1.08 standard cubic feet per stock tank barrel.
Subsequent to the completion of flow testing the well was shut in for an extended buildup period of 5.8 days. The preliminary analysis of this data indicates that the zone is somewhat over-pressured with a reservoir pressure of approximately 6,200 pounds per square inch and that the calculated permeability is in the range of 60 to 80 millidarcies. The combination of over-pressure and modest permeability leads to a good production index of approximately 0.4 barrels per day per pound of drawdown. This combination also appears to have allowed the well to clean up effectively as no skin damage was interpreted in the buildup analysis. These factors taken together suggest that the well is likely to produce at an initial rate near the test rate noted above of 1,200 bopd. Based on the Colon-1 results obtained to date, PetroLatina believes that this well will result in a significant uplift to the Company's existing production, represents an important commercial oil discovery and is likely to lead to further success on the Company's Middle Magdalena acreage in due course.
In order to predict the ultimate reservoir behavior the well will be placed on an extended production test for 180 days to assess the detailed sand quality, reservoir extent and potential recovery factors. All required documentation has been submitted to the local Ministry of Mines to enable this test to be permitted and the Company expects this permission to be granted.
Temporary production facilities will be constructed and it is expected that the well will be placed on production in approximately 45 days from now. Oil produced to date and during the test period has, and will be, transported to the Ecopetrol sales point at Ayacucho approximately 150km from the Colon-1 well location.
Re-mapping of the Colon-1 discovery is now in progress incorporating the new well results and aided by recently acquired high quality 3D seismic of the area. A preliminary estimate of the potential size of the Colon-1 discovery will be made when mapping has been completed. Mapping is also being carried out to define additional drilling locations on the La Paloma block to follow up the Colon discovery.
The rig which drilled the Colon-1 well was subsequently moved to the Los Angeles-11 development well location, and has already reached the targeted total depth. Preliminary results for the Los Angeles-11 well are expected to be available shortly and will be announced in due course.
Juan Carlos Rodriguez, CEO of PetroLatina, commented, "We are pleased to note that the results of the Colon-1 pressure build up test appear to confirm our earlier positive view regarding the potential impact of this well on PetroLatina's near term production rate. This drilling success will not only greatly supplement the Company's production volumes but will also allow for development of the La Paloma field which has several additional promising drilling locations. It will also result in an increase in the Company's reserves in due course. The proximity of this well to our existing and underutilised production facilities will allow us to monetize this discovery in the short term."
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