Rio Verde Well to Be Plugged, Abandoned

Global Energy announced the result of the testing of the Rio Verde 2 exploratory obligation well within the previously untested Rio Verde fault block of the Colombian Rio Verde contract. 

The well was drilled to a final depth of 12,340 feet and log evaluation had indicated commercial hydrocarbons present. Oil and gas shows were recorded during drilling and standard log calculation techniques were employed by one major service company and one independent log analysis company indicating that hydrocarbons were present and that well testing should proceed. However, following testing of four zones between 11,300 and 12,100 feet - Middle Gacheta (11,933 to 11,967 feet); Lower Gacheta (12,058 to 12,068 feet); Upper Gacheta (11,774 feet, 11,789 to 11,790 feet, 11,815 feet and 11,826 to 11,827 feet); and Guadalupe (11,328 to 11,334 feet) - no commercial hydrocarbons were found. 

Of the four zones, only the Lower Gacheta tested heavy oil and gas, but in non-commercial quantities. All the other zones tested fresh to low chloride water with no oil. The Company tested its production casing to confirm that no mechanical issues could have created a casing leak allowing shallow fresh water zones to affect the various tests. No mechanical problems were eventually detected and it was concluded that the low salinity water tests were valid. The preliminary geological conclusion regarding the Rio Verde fault block is that the fault seal was ineffective and allowed all hydrocarbons to leak up-dip into the adjacent productive Boral fault block. 

The well will, therefore, be plugged and abandoned and the Rio Verde fault block relinquished to the National Hydrocarbons Agency ('ANH'). The Rio Verde field accounted for 0.9 million barrels of oil equivalent ('BOE') of probable reserves (representing approximately 1% of the Company's net reserves in this category) and 2.2 million BOE of possible reserves. 

The Company remains committed to its previously announced Three Year Plan but the program and timetable will be reviewed in light of the Rio Verde 2 well results. The Company will now begin preparations for the next well, Tilodiran 4, on the producing Tilodiran field, which is intended to be completed by the end of the year.