PetroLatina's Colon-2 Flows Oil at 'Substantial Rate'
PetroLatina has announced that the Colon-2 well, on the La Paloma block, is now on test and is currently flowing oil at a substantial rate.
The Colon-2 development well has been placed on a production test and is producing oil at an average rate of 664 barrels of oil per day ("bopd") on a restricted choke over the first three days of testing.
Juan Carlos Rodriguez, Chief Executive of PetroLatina, commented, "The success of PetroLatina's Colon-2 development well is most encouraging in that it not only provides the Company with increased short term cash flow, but also sets the stage for a full scale development of the Colon field discovery."
Colon-2 -- La Paloma Block
As previously announced, the Colon-2 well, the first appraisal well to be drilled following the Colon-1 discovery earlier this year, and located about 0.25 miles (450 metres) north of that well, has been successfully drilled to a total measured depth of 9,300ft, logged, cased and cemented. Colon-2 found the same oil bearing pay zone as that found to be oil productive in Colon-1, only 12ft structurally lower to that well. This was somewhat higher than the pre drill estimate and essentially serves to confirm the field maps and provide for a slightly more optimistic interpretation of oil in place than in the past. Those field maps, based on the high quality 2008 3D seismic survey, are therefore considered to be reliable.
The net oil pay thickness in the primary target in Colon-2 was essentially the same as in Colon-1 confirming that this reservoir has considerable potential. In addition to the specific Umir pay sand discussed above, the Colon-2 well found and tested oil from additional pay in a sand 300ft deeper than that which produced oil in Colon-1. Colon-2 also encountered oil pay, based on log interpretation, in an Upper Umir sand, also believed to be oil bearing but not tested in Colon-1.
The main Umir sand pay zone was cored throughout and the core is currently being analyzed to provide accurate porosity and permeability data for reservoir modeling purposes and the recalculation of reserve volumetrics.
The primary target Umir sand in Colon-2, as well as the deeper sand noted above, were perforated over the interval 8,774 to 8,812ft (38ft net) and 9,015 to 9,032ft (17ft net) respectively and testing of the well commenced on 8 September 2009. The well was flowed at an average rate of 664 bopd through a restricted choke between 8 to 16/64th over the initial three days of testing. Essentially no water was being produced at the end of this period confirming that both of the two zones under test are oil bearing. The flow rate and flowing pressures were stable at the end of the test period and the well continues to flow and the cumulative production to September 14, 2009 was 3,138 barrels of oil.
The oil produced from Colon-2 is being trucked to the Ecopetrol S.A. receiving station at Ayacucho and sold under the same terms as those which apply to the Colon-1 oil production.
The Colon-2 well was drilled on the La Paloma Block in which the Company holds an 80% interest. This block is held under the same attractive terms from the Agencia Nacional de Hidrocarburos ("ANH") as those outlined previously for the Midas block whereby the royalty is 8%, no "high price" or "windfall profits" formula applies until 5 million barrels have been produced and there is no state back in right. As such, each barrel of oil produced in this block is approximately three times as valuable to the Company, in terms of net cash flow, as a barrel produced from one of the Company's traditional fields such as Los Angeles.
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