28.04.09
Drill Programme Update
PetroLatina Energy Plc
(“PetroLatina” or the “Company”)
Drill Programme Update
Positive Results at Los Angeles-11 Development Well
PetroLatina (AIM: PELE), an independent oil and gas exploration, development and production company focused on Latin America, announces positive results for its recently drilled Los Angeles-11 development well alongside a general update on its ongoing drill programme.
Highlights:
• Los Angeles-11 brought into production at a rate of approximately 220 bopd.
• Log interpretation on the well indicated 217ft of net oil pay in the primary target.
• Oil also tested at a deeper secondary target which should ultimately increase the field’s reserves.
• Well drilling costs of US$2.6 million were significantly below budgeted cost.
• Los Angeles-12 has been drilled to 8,000ft (target depth of 7,700ft) and is currently under evaluation.
• Colon-1 well poised to come onto production at a rate of approximately 1,200 bopd.
• Los Angeles-14 development well to be spudded in the coming weeks.
Los Angeles-11, drilled in the Los Angeles field, located in the Middle Magdalena valley, Colombia was a successful development well which, in addition to providing production from the established Lower Lisama sands as planned, tested oil from deeper basal Lisama sands. It was spudded on 17 February 2009 and reached a total measured depth of 7,217ft eleven days later on 28 February 2009. The well was drilled at a location between the existing Los Angeles-5 and 6 wells. The Los Angeles-5 well, currently producing at a rate of 60 barrels of oil per day (“bopd”), has to date produced approximately 1 million barrels of oil (“bbls”) since it was drilled in 1986. The Los Angeles-6 well, currently producing at a rate of 100 bopd, has to date produced approximately 1.1 million bbls since it was put on production in 1988. The Company retains a 40 per cent. working interest in the Los Angeles-11 well and is the operator.
Logging of the Los Angeles-11 well confirmed PetroLatina’s interpretation that the primary target Lower Lisama sands would be present and oil bearing. Log interpretation indicated that the well contained 217ft of net oil pay in the interval from 6,750ft to 7,012ft.
Four important results were obtained from the Los Angeles-11 well, namely:
1. The thickness of net pay was greater than that encountered in the offset wells. Previous wells drilled in the field were perforated and produced from approximately 120ft to 130ft of net oil pay whilst the Los Angeles-11 well was perforated over an interval of 217ft of net oil pay. It is anticipated that this will, in due course, result in an upgrade in the estimated recoverable oil reserves for the field.
2. The additional net oil pay in the Los Angeles-11 well included a 32ft zone below the traditional Lower Lisama reservoir. This zone, which is known as the Cretaceous Tertiary Transitional Zone, had been seen in previous wells but was not tested. In Los Angeles-11 this section, tested in isolation, produced oil of slightly lower gravity (18 degrees API) than the traditional Lower Lisama sands (13 degrees API).
3. The well produced at a higher rate than was expected pre-drilling. Other nearby wells in the area currently produce in the range of 60 to 100 bopd whilst the Los Angeles-11 well has been placed on production at a rate of approximately 200 bopd. The effect on the overall Los Angeles field rate is significant in that the rate prior to drilling of Los Angeles-11 was 430 bopd gross (PetroLatina’s share net of all royalties being 138 bopd) whilst the current field rate is approximately 630 bopd gross (202 bopd net to PetroLatina).
4. A significant cost reduction was achieved relative to the drilling of previous wells. This well, which was expected to cost the Company US$3.3 million, actually cost US$2.6 million. This significant reduction in drilling costs in the area, compared to costs experienced as recently as one year ago, is expected to improve the field development economics.
Subsequent to completion of the drilling, logging, casing and perforating of the Los Angeles-11 well, the drilling rig, Latco 1, was released from the site and transported to the Los Angeles-12 well location and a service rig moved into position in order to conduct testing operations and put the well on production.
The Los Angeles-12 well has now been drilled to a total depth of 8,000ft (target depth of 7,700ft) and is currently under evaluation. A further announcement will be made in due course once that evaluation process has been completed.
Following evaluation of the Los Angeles-12 well, the Latco 1 rig will then be moved to the Los Angeles-14 development well location which is intended to be drilled as a deviated well from the Los Angeles-11 surface location. The use of an existing well pad is expected to reduce the cost of drilling the Los Angeles-14 development well.
In addition, PetroLatina’s Colon-1 well, which, as previously announced, tested at a rate of approximately 1,200 bopd, is now close to being placed on commercial production. The field facilities are now complete and production will begin as soon as a final Crude Oil Sales Agreement has been agreed. Several parties have proposed purchasing the Colon-1 oil production and final negotiations are in progress. The initial production results for the Colon-1 well will be announced in due course.
Juan Carlos Rodriguez, CEO of PetroLatina, commented:
“The success at Los Angeles-11 has increased that field’s production rate significantly. The Los Angeles-11 development well was important to PetroLatina in that it proved that we could drill wells in this area at considerably lower cost than was expected and experienced only a year ago, and it should also ultimately add reserves to the field as a result of the proving up of oil production in oil bearing sands below the previously known Lower Lisama reservoir.
“We continue to pursue our strategy of bringing rapidly the Company’s previously under exploited assets into full production and as such are pleased to announce the completion of the third well in the current work programme.”
Mr Menno Wiebe, a Non-executive director of the Company, has reviewed and approved the technical information contained within this announcement in his capacity as a qualified person, as required under the AIM rules. Mr Wiebe is a Petroleum Geologist and has been a Member of the American Association of Petroleum Geologists for more than 25 years and a Member of the Geological Society for more than 5 years.
Enquiries:
PetroLatina Energy Plc
Juan Carlos Rodriguez, Chief Executive Officer
Tel: +57 1627 8435
Pawan Sharma, Executive Vice President - Corporate Affairs Tel: +44 (0)207 956 2821
Strand Partners Limited
Simon Raggett / Matthew Chandler Tel: +44 (0)20 7409 3494
Financial Dynamics
Ben Brewerton / Susan Quigley Tel: +44 (0)20 7831 3113
Additional Information on PetroLatina Energy Plc:
PetroLatina Energy Plc (AIM: PELE), formerly known as Taghmen Energy Plc, was founded in 2004. The Company is presently focused on Colombia after the sale of its assets in Guatemala in which it retains a 20% interest in the first three wells and a 20% working interest in future wells. In Colombia, the Company currently holds 40% and 20% interests in the Los Angeles and Santa Lucía fields on the Tisquirama licence respectively, and a 100% interest in the Doña María field. In November 2007 the Company secured the extension of the Tisquirama licence for the economic life of the fields. In April 2006 the Group acquired an interest in two exploration blocks with an 85% interest in Midas and an 80% interest in La Paloma. PetroLatina also owns the Río Zulia-Ayacucho pipeline in the prolific Catatumbo basin which transports crude oil. Present exploration/exploitation activities in this area should increase the volume of crude oil transported resulting in an increased cash flow. Further information is available on the Company’s website (www.petrolatinaenergy.com).
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