PetroLatina has announced positive results for its recently drilled Los Angeles-11 development well alongside a general update on its ongoing drilling program.
Los Angeles-11, drilled in the Los Angeles field, located in the Middle Magdalena valley, Colombia was a successful development well which, in addition to providing production from the established Lower Lisama sands as planned, tested oil from deeper basal Lisama sands. It was spudded on February 17, 2009 and reached a total measured depth of 7,217ft eleven days later on 28 February 2009. The well was drilled at a location between the existing Los Angeles-5 and 6 wells. The Los Angeles-5 well, currently producing at a rate of 60 barrels of oil per day (“bopd”), has to date produced approximately 1 million barrels of oil ("bbls") since it was drilled in 1986. The Los Angeles-6 well, currently producing at a rate of 100 bopd, has to date produced approximately 1.1 million bbls since it was put on production in 1988. The Company retains a 40 per cent. working interest in the Los Angeles-11 well and is the operator.
Logging of the Los Angeles-11 well confirmed PetroLatina’s interpretation that the primary target Lower Lisama sands would be present and oil bearing. Log interpretation indicated that the well contained 217ft of net oil pay in the interval from 6,750ft to 7,012ft.
Four important results were obtained from the Los Angeles-11 well, namely:
1. The thickness of net pay was greater than that encountered in the offset wells. Previous wells drilled in the field were perforated and produced from approximately 120ft to 130ft of net oil pay whilst the Los Angeles-11 well was perforated over an interval of 217ft of net oil pay. It is anticipated that this will, in due course, result in an upgrade in the estimated recoverable oil reserves for the field.
2. The additional net oil pay in the Los Angeles-11 well included a 32ft zone below the traditional Lower Lisama reservoir. This zone, which is known as the Cretaceous Tertiary Transitional Zone, had been seen in previous wells but was not tested. In Los Angeles-11 this section, tested in isolation, produced oil of slightly lower gravity (18 degrees API) than the traditional Lower Lisama sands (13 degrees API).
3. The well produced at a higher rate than was expected pre-drilling. Other nearby wells in the area currently produce in the range of 60 to 100 bopd whilst the Los Angeles-11 well has been placed on production at a rate of approximately 200 bopd. The effect on the overall Los Angeles field rate is significant in that the rate prior to drilling of Los Angeles-11 was 430 bopd gross (PetroLatina's share net of all royalties being 138 bopd) whilst the current field rate is approximately 630 bopd gross (202 bopd net to PetroLatina).
4. A significant cost reduction was achieved relative to the drilling of previous wells. This well, which was expected to cost the Company US $3.3 million, actually cost US $2.6 million. This significant reduction in drilling costs in the area, compared to costs experienced as recently as one year ago, is expected to improve the field development economics.
Subsequent to completion of the drilling, logging, casing and perforating of the Los Angeles-11 well, the drilling rig, Latco 1, was released from the site and transported to the Los Angeles-12 well location and a service rig moved into position in order to conduct testing operations and put the well on production.
The Los Angeles-12 well has now been drilled to a total depth of 8,000ft (target depth of 7,700ft) and is currently under evaluation. A further announcement will be made in due course once that evaluation process has been completed.
Following evaluation of the Los Angeles-12 well, the Latco 1 rig will then be moved to the Los Angeles-14 development well location which is intended to be drilled as a deviated well from the Los Angeles-11 surface location. The use of an existing well pad is expected to reduce the cost of drilling the Los Angeles-14 development well.
In addition, PetroLatina's Colon-1 well, which, as previously announced, tested at a rate of approximately 1,200 bopd, is now close to being placed on commercial production. The field facilities are now complete and production will begin as soon as a final Crude Oil Sales Agreement has been agreed. Several parties have proposed purchasing the Colon-1 oil production and final negotiations are in progress. The initial production results for the Colon-1 well will be announced in due course.
Juan Carlos Rodriguez, CEO of PetroLatina, commented, "The success at Los Angeles-11 has increased that field's production rate significantly. The Los Angeles-11 development well was important to PetroLatina in that it proved that we could drill wells in this area at considerably lower cost than was expected and experienced only a year ago, and it should also ultimately add reserves to the field as a result of the proving up of oil production in oil bearing sands below the previously known Lower Lisama reservoir.
"We continue to pursue our strategy of bringing rapidly the Company's previously under exploited assets into full production and as such are pleased to announce the completion of the third well in the current work program."
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