Quetzal has cased the Atzam #3A development well, to a depth of 1506 feet, as a potential Coban C-12 new pool oil discovery in the 1-2005 Exploration and Production contract area of Guatemala. The Company is the operator of the contract with a 97 percent working interest.
The Company is very encouraged by the presence of 36 degree API oil in the over-pressured C-12 reservoir which was encountered in a significantly structurally higher position relative to surrounding wells. At this time the Company cannot speculate as to how large and accumulation may have been found as this will require testing and independent engineering evaluation.
The Atzam #3A well encountered the top of the C-12 member of the upper Coban Formation at 1330 feet, approximately 330 feet higher than in Atzam #2 and 650 feet higher than in Atzam #1A. The reservoir section of the C-12 in Atzam #3A is comprised of a series of thin dolomite beds with approximately 20 feet of potential net oil pay as determined by Schlumberger Carbonate Advisor ELAN petrophysical interpretation. While open-hole logging with 11.6 pound per gallon mud, the well flowed 4 barrels per hour with approximately 50% drilling mud and 50% 36 degree API oil. The perforating and testing of the C-12 is expected to be conducted in approximately 2 weeks time, utilizing the Company owned service rig.
Quetzal is currently evaluating the drilling of Atzam #4 as an offsetting well to a depth of 4,000 feet to evaluate the oil potential down to and including the Coban C-19. The significantly higher structure encountered at the Atzam #3A C-12 level, strongly suggests in the Company's opinion, that deeper reservoirs originally targeted by Atzam #3A may also be structurally high and oil bearing.
The Atzam #3A development well had a planned total depth of 4,300 feet and targeted the C-18 and C-19 members of the Coban formation, which is a prolific oil producer within the Peten basin of Guatemala. The well was spudded on February 23, 2010, and reached total of 1,812 feet measured depth on April 12, 2010.
While drilling Atzam #3A, the Company experienced a number of mechanical and technical challenges. These included unexpected over-pressured intervals causing oil and water to enter the well-bore, a mud system not suited to handling a weighted mud for an extended period of time, getting stuck in the hole after not being able to circulate for a number of days due to a burst Kelly hose, fishing to retrieve stuck drilling equipment and leaving a 228 foot fish in the hole.
The company evaluated several options as how to best proceed. It was determined that casing and testing the significant C-12 oil potential was preferable to continue drilling operations by whip-stocking around the fish. Continued drilling in the same well bore would have required a significant added expense and potentially risked losing the well. In response to the unexpected drilling challenges experienced in Atzam #3A, the company will modify the drilling program and some of the drilling equipment on the company owned rig before drilling Atzam #4.
Quetzal is also pleased to provide updated information on recent operations progress in Colombia. The ANH has granted an extension until July 21 to complete Canaguay #1 drilling operations on the Canaguaro block in the Llanos Basin. The drilling location and access road have been completed and the Nabors-119 drilling rig is expected to begin moving to the Canaguay #1 drilling location shortly. The company has a 25% working interest in the Canaguaro block. The acquisition of 3D seismic is approximately 35% complete on Llanos block LLA-27 and 3D seismic operations are expected to begin shortly on block LLA-21. Several exploration wells are currently planned for blocks LLA-27 and LLA-21 during the last quarter of 2010.
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