Gran Tierra Increases Production to 15,000 bopd in South America
Gran Tierra has provided an update on the Company's first quarter oil production, drilling operations, and planned property divestments.
"Gran Tierra Energy ended the first quarter of the year by passing another major milestone central to our growth strategy, as production reached record levels," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "We remain focused on further development of the Costayaco field, as well as continuing our evaluation and drilling of exploration projects in Colombia and Peru, and maintaining our current position in Argentina."
Production at the end of the first quarter of 2009 reached a maximum of 15,334 barrels of oil per day (BOPD), net after royalty, and averaged approximately 10,000 BOPD over the quarter. The increase in production is due primarily to the continued development of the Costayaco field in the Chaza Block in Colombia where Gran Tierra Energy has a 100% working interest and is the operator.
With Costayaco-5 coming online in a matter of days, Gran Tierra Energy expects to maintain a production level of roughly 15,000 BOPD, net after royalty, through the second quarter of 2009.
Costayaco-7, spudded on February 13, 2009, was drilled in the extreme northern lobe of the Costayaco structure approximately 2 kilometers northwest of Costayaco-4, and reached total measured depth (MD) of 8,784 feet (8,783 feet true vertical depth) on March 30, 2009. Well logs indicate the presence of reservoir sandstones in the Villeta T sand formation from 8,414 feet MD to 8,463 feet MD and in the Caballos formation from 8,565 feet MD to 8,716 feet MD. The Upper Villeta T and Caballos reservoirs came in 59 feet lower than the pre-drill prognosis due to the overlying middle Villeta section being thicker than what was anticipated by seismic.
Electric logs, mud logs, and pressure gradient data all indicated the presence of an oil column in the Upper T sand although considerably less than the pre-drill prognosis. Electric logs suggest the presence of oil in the Caballos interval but pressure gradient data indicates only water is present. Gran Tierra Energy will undertake additional testing of these reservoir intervals to confirm the type of fluids present. If only water is confirmed in the Caballos reservoir and a reduced column of oil is present in the Upper T sand reservoir, the results will have a negative impact on the possible reserves category. However, the results from these tests should not impact reserves in the proved and probable categories.
Construction at the Costayaco-8 location has been initiated 600 meters south of Costayaco-1. Drilling is expected to commence in mid-May and take approximately 30 to 45 days. Gran Tierra Energy anticipates the drilling of Costayaco-9 and 10 will follow at locations yet to be determined.
As part of an ongoing portfolio review of properties, Gran Tierra Energy has selected certain non-core assets for divestiture. On March 31, 2009, Gran Tierra Energy signed an asset purchase and sale agreement with Lewis Energy Colombia, Inc. for Gran Tierra Energy's interests in the Guachiria Norte, Guachiria, and Guachiria Sur blocks in the Llanos Basin of Colombia. Closing is expected to take place on or around April 16, 2009. Principal terms include consideration of US $7 million, plus settlement of outstanding issues between Lewis Energy and Gran Tierra Energy's subsidiary, Solana Resources, comprising an initial cash payment of US $4 million at closing, followed by 15 monthly installments of US $200,000 each beginning June 1, 2009 and extending through August 3, 2010. Gran Tierra Energy will retain a 10% overriding royalty interest on the Guachiria Sur block in the event of a discovery, designed to reimburse 200% of Gran Tierra Energy's net costs for previously acquired seismic data. Gran Tierra Energy has agreed to assume any environmental liabilities existing on the properties at the date of sale, estimated at US $1.2 million. As a result of the divestiture, Gran Tierra Energy expects an approximate US $6.2 million reduction in 2009 capital spending.
"With Costayaco-7 now defining the northern limit of the field, we will turn our attention to growing production capacity with Costayaco-8," Dana Coffield added. "In addition, following careful review, we are divesting certain non-core assets which will allow us to maintain our very strong balance sheet, and allocate capital to those projects with the greatest potential to generate increased shareholder value over time."
- Gran Tierra Receives 'Outperform' Rating After Revealing Exploration Plans (Jun 15)
- Gran Tierra Energy Reveals $38.6 Million Net Loss (Aug 05)
- Gran Tierra Touts Record Production in Colombia (Apr 17)