Update re Serafin-1 gas well (4865D)
March 23 2011 - 8:16AM
UK Regulatory
TIDMPELE
RNS Number : 4865D
Petrolatina Energy PLC
23 March 2011
23 March 2011
PetroLatina Energy Plc
("PetroLatina" or the "Company")
Update re Serafin-1 gas well (50% Working Interest &
Operator)
Initial Flow Rates, Commencement of an Extended Test and Sale of
Gas
PetroLatina (AIM: PELE), the independent oil and gas
exploration, development and production company focused on Latin
America, is pleased to announce that extended production testing
has now commenced on the Serafin-1 gas well and will continue for a
period of 6 months.
The Serafin gas field is located in the Company's Tisquirama
licence block in the Middle Magdelana Valley, Colombia. The
discovery was made by Texaco in 1991 and was not developed at that
time due to a lack of markets for such gas. The gas bearing
reservoir is found in the Real Formation at a depth of 4,582 to
4,598ft and the well is located approximately 3km to the northeast
of the Querubin-1 producing oil well drilled by the Company in mid
2010. The Serafin-1 gas well was worked over in January 2007 and
tested at flow rates of 14 million cubic feet of gas per day
("MMscf/d"). Based on an assessment by Ryder Scott Company, L.P.,
the independent petroleum consultants, in their reserves report of
November 2009, gas initially in place was estimated to be 5.37
billion cubic feet ("Bcf") with 1P Reserves of 3.13 Bcf, and the
well was expected to be capable of initially producing up to 7
MMscf/d. The Serafin-1 gas well is currently jointly owned by
PetroLatina (50%) and PetroSantander Corporation (50%), although
such interests would reduce to 25% each in the event that Ecopetrol
S.A. was to exercise its back-in rights and pay its share of
capital costs expended to date and ongoing operational costs. The
Company is the operator.
Initial production rates from the first few days of continuous
testing started with a flow of 5.5 MMscf/d of gas, a well pressure
of 1,850 pounds per square inch ("psi") and minimal pressure
decline. The well was subsequently shut in for 8 days to enable
memory gauges to be removed and to provide a preliminary assessment
as to the minimum size of the reservoir. The extended production
test has now recommenced with a flow rate of 5.5 MMscf/d of gas and
a well pressure of 1,850 psi, and will continue initially for
another 70 days, at which point the well may be shut in for a short
period before continuing the test until the end of the 6 month test
period. During that time, production rates will be stabilised and
the overall well performance evaluated, with further information
being obtained on the size of the gas accumulation. Although the
reservoir sand is known to have good porosity and permeability
based on historic testing, the areal extent of the reservoir is not
known and hence this extended test is required in order to prove up
the longer term commercial viability of the well.
Simultaneously with commencement of the extended test,
PetroLatina has entered into an interruptible sales contract for
all the gas produced during the 6 month extended test period with
Ecopetrol S.A., at 90% of the regulated price for Texaco for
Barranca-Ballena's gas (as regulated by CREG, the Regulatory
Commission of Energy and Gas of Colombia). The regulated price is
currently $4.2562/million British thermal unit ("BTU").
Once the extended testing programme has been concluded,
PetroLatina will provide shareholders with a full update on the
test results including the stable production rate achieved
throughout the test period. A preliminary assessment will also be
made of the minimum size of the reservoir and its value to the
Company.
Signing of VMM-28 E&P contract (100% Operated Working
Interest - 54,522 Ha)
The Company is also pleased to announce that it has now signed
the formal definitive Exploration and Production ("E&P")
contract with the Agencia Nacional de Hidrocarburos ("ANH") of
Colombia in respect of the VMM-28 block. PetroLatina owns a 100%
operated working interest in the new contract, and will now
commence further analysis of the available historic 2D seismic data
before comissioning additional seismic analysis.
Luc Gerard, Chairman of PetroLatina, commented:
"We are delighted to have brought the Serafin gas well into test
production which has enabled initial commercial gas sales to
commence. We anticipate that the additional cash flows expected
from this project will help fund our current plans for further
drilling on our portfolio of Colombian assets during this
year."
Juan Carlos Rodriguez, Chief Executive Officer of PetroLatina,
commented:
"Initial results to date from the Serafin-1 gas well have been
encouraging and we look forward to reviewing the results of the
longer term test and reporting on them in due course. Having now
brought Serafin-1 into test production, we will continue to pursue
our strategy for the Company of increasing production and
substantially increasing Possible Reserves, as well as moving an
element of them into the 2P category.
"Signing of the formal VMM-28 E&P contract positions us as
the main player in the Middle Magdalena Valley basin. The block is
strategically located in the basin; immediately adjacent to the
Company's La Paloma producing oil fields, and next to VMM-27, which
is owned by Royal Dutch Shell. Preliminary analysis of existing
historic 2D seismic data suggests that the type of structure from
which the Company produces oil on its La Paloma block may also be
in a trend and hold commercial oil reservoirs on VMM-28."
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 30 years and a Member of the Geological
Society for more than 7 years.
Enquiries:
PetroLatina Energy Plc Tel: +57 1627 8435
Juan Carlos Rodriguez, Chief Executive Officer
Pawan Sharma, Executive Vice President - Corporate Tel: +44 (0)20 7766
Affairs 0081
Strand Hanson Limited
Simon Raggett/Matthew Chandler Tel: +44 (0)20 7409
3494
Evolution Securities Limited
Rob Collins/Chris Sim Tel: +44 (0)20 7071
4304
Financial Dynamics
Ben Brewerton/Susan Quigley Tel: +44 (0)20 7831
3113
This information is provided by RNS
The company news service from the London Stock Exchange
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