Loon Energy Evaluating Abanico Block
Loon Energy is in the process of drilling the Aleli-D1 well to evaluate one of several large targets defined on the Abanico Block, located within the Magdalena Valley in Colombia. This is the second well to be drilled as part of Loon's work program at Abanico.
The Aleli-D1 re-entry was spud September 21st, 2005 and had reached a depth of 6,633' as of November 3rd, 2005. At this point the traveling block and its coupling were damaged and have just been repaired. Due to the stoppage of operations, the drill string has become stuck and the JV is working to free the string and resume drilling operations. The targeted total depth for the Aleli-D1 well is 7,800'.
The drilling rig has been on the well for 55 days. The original drilling program anticipated a total of 31 days to reach total depth. Penetration rates, which were slower than anticipated below approximately 4,500' due to numerous thick chert beds, were responsible for some of the extra time. Rig maintenance and repair and associated issues, including the recent damage to the traveling block, caused the additional delays.
Loon expects to make a determination by the end of this week on whether to continue drilling to the targeted depth or evaluate the open hole section of the well. Oil and gas shows were being encountered at the point of stoppage of operations and oil shows were encountered in various intervals below approximately 4,000'.
The drilling of Aleli-D1 will fulfil, in part, Loon's commitment to expend a minimum of US$6 million to earn 49% interest of the interest of Kappa Resources Colombia Ltd. ("Kappa") in the Abanico Association Contract. Drilling operations are operated by Kappa. Earning is subject to the approval of Ecopetrol, the Colombian national oil company. The Contract area covers greater than 200,000 acres (greater than 300 square miles) in the Upper Magdalena Valley.
Loon expects to spud the next well in the Abanico program during the first quarter of 2006. A recently completed 3-D survey has defined several potential locations for the third Loon well.
Loon's first well in the on-going drilling program, Ventilador-2, encountered 80' of gas pay and tested up to 2.5 MMcf/d. Kappa has advised that they expect to be able to tie-in the Ventilador-2 well during the first quarter of 2006.