Pacific Rubiales Completes 1st Phase in Colombian Exploration
Pacific Rubiales announced the final results of the first phase of its exploration campaign from late 2007 through to April 2010, on its Quifa and Rubiales Blocks, located in the Llanos Basin, Colombia. These results have led to a declaration of commerciality for the Quifa southwest area and the Rubiales southwest area, an important event for the company as it has focused significant effort and capital to bring these areas into production.
Mr. Ronald Pantin, Chief Executive Officer of Pacific Rubiales, commented, "The closing of this first phase is a key milestone in our strategy to continuously grow our resources, prove new reserves and rapidly bring new areas into our existing production infrastructure. The success of the exploration campaign within Quifa in particular, leading to over 40,000 ha of declared commerciality, is also very significant since it demonstrates the long term viability of the Rubiales region and the Llanos Basin. I commend our technical team for their commitment to this campaign, their execution ability and the results that we have seen thus far."
The Quifa and Rubiales exploration campaign to date has included the acquisition of 323 km of 2D seismic profiles and the drilling of a total of 35 wells on both blocks: 23 wells on the Quifa Block - consisting of 7 exploratory, 6 stratigraphic and 10 appraisal wells; and 12 wells on the Rubiales Block, consisting of 3 exploratory and 9 appraisal wells. In total the exploration campaign had a success rate of 83%.
As a result of this extensive campaign, a number of oil discoveries and incorporations have been carried out. Discoveries in Prospects "D", "E" and "H" in the Quifa Block incorporated a total of 83 mmbo of certified 2P (P1 + P2) gross reserves, while in the Rubiales Block, the discoveries in the northwest and southwest areas added 80 mmbo of certified 2P (P1+P2) gross reserves, for a total of 163 mmbo 2P reserves incorporated during the exploration campaign in both blocks. These reserves were certified by Petrotech Engineering under NI 51-101 (refer to press release dated March 15, 2010). These discoveries allowed the Company to request from Ecopetrol the approval of commerciality for the Quifa southwest area and the Rubiales southwest area (please refer to the company's investor presentation for a detailed map of these areas, located on the company's website at www.pacificrubiales.com). The commerciality for Quifa southwest was approved by Ecopetrol, on April 19th, 2010. The commerciality for the area of northwest Rubiales has been submitted to Ecopetrol and is pending for approval.
In addition, in the northern Quifa area, 3 wells, including one exploratory and two stratigraphic wells drilled on Prospects "A," "F" and "Q," confirmed the presence of a hydrocarbon column on the top of the basal sandstones incorporating a total of 251 mmbo of certified gross resources.
QUIFA BLOCK EXPLORATION TO DATE
The exploration campaign in the Quifa block started in 2007 with the acquisition of 323 km of 2D seismic information. The seismic surveys optimized the subsurface image and the geologic interpretation of the block contributing to a redefinition of its exploration prospectivity. The results of the seismic interpretation allowed the company to identify 18 exploratory prospects on the Quifa block, named with the letters "A" through "R." Based on this evaluation, the Company drilled the Rub-147 exploratory well on Prospect "D" in the Rubiales area and the Quifa-5 exploratory well on Prospect "E" during the last quarter of 2008. Both wells resulted in oil discoveries.
As a result of these two discoveries, the company developed an aggressive drilling campaign to evaluate the prospects already identified. 22 additional wells, including six exploratory, ten appraisal and six stratigraphic wells were then drilled between the second half of 2009 and the first quarter of 2010. The exploratory wells Quifa-7, Quifa-9 and Quifa-I9-ST2, drilled on Prospects "H," "D" and "I," respectively, found oil on the Basal Sandstones and incorporated new reserves to the southwestern region of the Quifa block. The Quifa-6 exploratory well and the Quifa-22X, Quifa-24X and Quifa-26X stratigraphic wells also found oil in the same stratigraphic unit and confirmed the presence of hydrocarbons in the northern region of the Quifa block.
The appraisal drilling campaign included the Quifa-13 well on Prospect "D", Quifa-8, Quifa-12, Quifa-14, Quifa-17 and Quifa-18 wells on Prospect "E" and the Quifa-10, Quifa-11, Quifa-31 and Quifa-32 wells on Prospect "H". These appraisal wells successfully confirmed the extension of the discovered reservoirs made on Prospects "D", "E", "H" and "I" in southwest Quifa.
Also, the extensive production tests carried out in these wells confirmed the production potential of this area, similar to that of the adjacent Rubiales field. The exploration campaign on southwest Quifa incorporated 83 mmbo of certified proved and probable (P1+P2) gross reserves. Additionally, the Quifa-15 and Quifa-16 exploratory wells, drilled in Prospects "B" and "C" , and the Quifa-23X, Quifa-33X and Quifa-34X stratigraphic wells, drilled in Prospects "G", "C" and "M", located to the eastern and northern border of the block respectively, were unsuccessful and subsequently abandoned.
The petrophysical evaluation of all the wells indicated a net pay zone varying from 16 to 49.5 feet, averaging 24 feet, and with average porosities of 31%. The wells in southwest Quifa (Prospects "D", "E", and "H") were completed as producers, and the initial production tests indicated an average daily rate of 300 bopd of 13.4 degree API oil, slightly higher than the 12.5 degree API produced at the Rubiales oil field.
COMMERCIALITY ZONE AND QUIFA CONTRACT
The commerciality zone has an approximate area of 40,000 ha, and a development plan is being developed in order to reach the target of 30,000 bopd by the end of 2010 and 60,000 bopd by the end of 2011 for the whole of the Quifa block. The Quifa Contract, which continues until 2031, establishes that capital costs and operational expenses must be borne 70% by the company and 30% by Ecopetrol, and distribution of production after payment of royalties will be 60% to the company and 40% to Ecopetrol.
After the successful discovery results of the Rub-147 exploratory well, exploration activity was focused on an appraisal drilling campaign to the southwest and northwest borders of the Rubiales field, which included a total of 10 appraisal wells. The Rub-150, Rub-220, Rub-221, Rub-222 and Rub-224 wells confirmed the extension of the reservoir to the southwest of the Rubiales Block, while the Rub-251, Rub-366, Rub-357 and Rub-372 wells supported the continuity of Quifa Prospect "D" into the Rub-147 well discovery to the northeast. The well Rub-148 extended the reservoir to the east of the Rubiales-Piriri field and the well Rub-310, drilled in the northeastern part of the Rubiales-Piriri field, resulted dry. Extended production tests of 10 wells supported the request to extend the commercial area of the Rubiales field to the southwest, incorporating 22.2 mmbo of gross oil reserves for the southwest area. The results of the drilled wells in the northwest part of the field incorporated 57.8 mmbo of gross oil reserves, for a total of 80.0 mmbo of gross oil reserves incorporated for the field. The commerciality of the northwestern part of Rubiales has been submitted to Ecopetrol for approval.
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