Gran Tierra Energy has provided an operations update for the Costayaco Field in the Chaza Block, Putumayo Basin of southern Colombia. Gran Tierra Energy has a 100% working interest in the field and is the operator.
"On top of meeting our daily production plateau target of 19,000 BOPD at the end of August, ahead of schedule, we have now tied in an additional production well and are preparing to drill the final development well in the field for 2010, which will allow us to maintain these production levels as the field matures." said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy.
Costayaco-9 Production Test Results
Gran Tierra Energy has completed production testing on Costayaco-9, a vertical development well located 1,950 feet southwest of Costayaco-8. In early September, two separate production tests were conducted with a jet pump on Costayaco-9. A 24.5 hour production test was conducted on the T sandstone of the Villeta formation. This test covered a 40 foot interval and tested at approximately 926 BOPD with less than 1% watercut. A second 23.5 hour production test was conducted on the Caballos sandstone. This test covered a 64 foot interval and tested at approximately 1,840 BOPD with less than 1.5% watercut. Costayaco-9 has been tied in and is currently on production (from the T sandstone only) at approximately 1,860 BOPD.
Costayaco-10 will be drilled approximately 2,500 feet southwest of Costayaco-9. Lease construction is currently underway and the well is expected to spud in the last week of September. The main objective for Costayaco-10 is to add production capacity to assist in maintaining the gross production plateau of 19,000 BOPD from the Costayaco field. In addition, it is expected to convert probable and possible reserves into proven and probable reserves respectively. This is the last well planned to be drilled in the Costayaco field in 2009.
Costayaco field reached the five million cumulative barrels of oil production milestone on September 10, 2009. As stated in a previous announcement, an increase in royalties becomes effective once cumulative production exceeds five million barrels for the Costayaco field.
The additional royalty is dependent on West Texas Intermediate (WTI) oil price, and is approximately 17.1% at $70.00/bbl WTI. The combined royalty rate at 19,000 BOPD gross production and $70 WTI is approximately 26.5%. This results in a net after royalty production level of approximately 13,000 BOPD for the Costayaco field (including third party Net Profits Interest). This is in addition to current production of approximately 1,100 BOPD net after royalty from Gran Tierra Energy's other operated fields in the Putumayo Basin, and approximately 1,200 BOPD net after royalty production from Argentina.
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