Alange announced that after extensive testing, the Cerrito-1 well, located in the Cerrito block of the Catatumbo basin, has turned out 1.2 MMCFD, that will immediately be incorporated on stream into the pipeline to Cucuta, the capital city of the Department of Norte de Santander, Colombia.
Upon completion of testing, the well produced an average of 1.2 MMCFD of gas and 54 barrels per day of water, with a 32/64" choke, on natural flow, with wellhead pressure of 500 PSI. The incorporation of the production of Cerrito-1 will increase the total gas production of the Cerrito block to 1.6 MMCFD.
Luis E. Giusti, the Company's Chief Executive Officer, commented, "The successful Cerrito-1 workover kicks off the Company's plan to increase the sales of gas four-fold into the city of Cucuta."
On July 1, 2010, the Company initiated the workover of Cerrito-1, consisting of the abandonment of the deeper interval of La Luna formation, and a recompletion on the shallower interval (42 feet of net pay) of the same formation that had presented similar petrophysical characteristics of 12% porosity, 25% water saturation, and reservoir down hole pressure of 1,800 PSI.
The Cerrito-1 well, located 7 kilometers northeast of Cucuta, was originally drilled in September 1980 to a total depth of 9,200 feet, and completed in the La Luna formation in April 1982. It had been inactive since May 2007 due to damages in the electro-submersible pump unit and high water cut.
Alange Energy's current gas deliveries, excluding Cerrito-1, are 1.4 MMCFD comprised of 0.4 MMCFD from the Cerrito block and 1.0 MMCFD trucked from the Carbonera block. The execution of infrastructure projects in Carbonera is underway, including a 6-inch, 8-kilometer pipeline and new loading facilities that will significantly reduce trucking times and enable the projected growth in production to reach the market. It also includes the construction of compression and NGL extraction facilities, projected to start up in the fourth quarter of 2010. The plan also considers 9 additional trucks for Carbonera, which have already been purchased, the re-entry of 4 wells in Carbonera, and the drilling of one exploration well in the first quarter of 2011.
The gas from the Cerrito Block is being sold at the wellhead for US$4.00/MMbtu to Invercolsa, a company that distributes and sells retail for industrial and domestic consumption in Cucuta, where there is a significant captive market. The sales contract specifies pricing on a sliding scale as higher volumes are reached, with the next increase taking the price to 4.50 $/MMbtu for volumes ranging from 2.5 MMCFD to 3.5 MMCFD.
The Cerrito Block, located in the Catatumbo Basin of Colombia, is an asset in which the Company holds working interests of 79.8% in the Cerrito 1 and 2 wells, 76% in the T-Burns well, and 81% in the remaining exploration area.
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