Well flows up to 1,077 BOPD from two zones independently without pumps, 850 BOPD comingled; no oil-water contacts identified
CALGARY, Alberta, August 26, 2010, Gran Tierra Energy Inc. ("Gran Tierra Energy") (AMEX: GTE; TSX: GTE), a company focused on oil and gas exploration and production in South America, today announced that it had completed initial testing of the Moqueta-2 delineation well in the Moqueta new field discovery on the Chaza Block in the Putumayo Basin, Colombia. Gran Tierra Energy has a 100% working interest and is the Operator of the Chaza Block.
"We are very pleased with the testing result at Moqueta-2, where oil flowed naturally at higher rates without pumps than Moqueta-1. Compared to Moqueta-1, the oil column is thicker and the oil bearing zones are more productive," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "Due to operational efficiencies and integration of the Moqueta-2 well results, the Moqueta-3 well will now be drilled from the Moqueta-1 well pad location down-dip in a southerly direction, to further assess the size of the Moqueta oil field since no oil-water contacts have been identified."
Moqueta-2 Delineation Well, Chaza Block
Gran Tierra Energy has completed initial testing on Moqueta-2 by collecting reservoir data and fluid samples from three zones - the Lower Caballos Formation, the Middle Caballos Formation, and the Upper Caballos Formation. Out of five hydrocarbon bearing reservoirs, only three reservoirs were tested to maintain the casing integrity for future production.
Five intervals totaling 18 feet in the Middle Caballos oil bearing interval were perforated and tested from 4,120 feet to 4,157 feet measured depth. Oil flowed without assistance from pumps at 850 barrels of oil per day (BOPD) with a 30/64 inch choke. The oil gravity and watercut were 30 API and 0.1%, respectively.
Three intervals totaling 16 feet in the Lower Caballos oil bearing interval were perforated and tested from 4,171 feet to 4,194 feet measured depth. Oil flowed without assistance from pumps, at up to 227 BOPD with a 30/64 inch choke. The oil gravity was 28 API with a watercut of 0.4%. When comingled, the two zones flowed 850 BOPD without assistance from pumps.
Finally, a seven foot interval from 4,190 feet to 4,197 feet measured depth in the Upper Caballos gas bearing interval was perforated and tested. It tested gas at 5.1 million standard cubic feet per day with a 28/64 inch choke. No water was produced during the production test.
No testing was conducted in the T Sandstone and the Villeta Lower U Sandstone to preserve the casing integrity for future oil production from the Lower Caballos and Middle Caballos intervals.
Planning is underway to construct a 7 kilometer pipeline to tie Moqueta-1 pad wells into the Costayaco infrastructure, with anticipated initiation of long term oil testing and early production in the first quarter of 2011.
The second delineation well, Moqueta-3, is planned to be drilled from the Moqueta-1 well pad location and is expected to spud mid-September, 2010. This well is anticipated to penetrate the oil bearing intervals 460 meters south of the Moqueta-1 bottom hole location. Updated mapping and integration of the Moqueta-2 well results suggest that the Moqueta-3 well will penetrate the oil bearing reservoirs 300 feet down-dip from Moqueta-1. As demonstrated in Moqueta-2, drilling down-dip has the potential to extend the oil columns encountered so far and possibly establish whether an oil leg may exist in current gas bearing zones.
Subject to the results of Moqueta-3, Moqueta-4 is planned to be drilled from a new pad location approximately 1.5 kilometers southwest of the Moqueta-1 surface location. Moqueta-4 is expected to spud in early December 2010. The main objective of this well is to further delineate the southwestern extension of the Moqueta discovery.
A 230 square kilometer 3D seismic survey is scheduled to be acquired over the Moqueta oil discovery and adjacent prospects and leads. This survey will overlap existing 3D surveys that cover the Costayaco Field in the Chaza Block; the Juanambu, Toroyaco, Linda, Mary, and Miraflor Fields in the adjacent Gran Tierra Energy operated Santana and Guayuyaco Blocks; as well as the upcoming Verdeyaco 3D survey on the Chaza and Guayuyaco Blocks in order to provide a comprehensive picture of this maturing exploration play.
Popa-3, an appraisal well of the Popa gas discovery in the Rio Magdalena Block, spud on July 22, 2010 and reached a depth of 7,250 feet measured depth (MD) on August 9, 2010. Gas and condensate shows were recorded through the Montserrate Formation with electric logs indicating total net gas pay of 19 feet within two sands in the upper Montserrate Formation. The well has been cased for possible future testing with a workover rig. Gran Tierra Energy has a 44% working interest and is the Operator of the Rio Magdalena Block.
New Ventures and Production Update
Gran Tierra Energy has signed an agreement with Lewis Energy Colombia, Inc., to farm-in to the Putumayo-1 block of the Putumayo Basin, Colombia. The block lies immediately south of, and adjacent to, Gran Tierra Energy's Chaza Block, which contains the Costayaco field. Lewis Energy Colombia, Inc. will transfer a 55% working interest and operatorship of Putumato-1 to Gran Tierra Energy and retain 45% working interest.
Initial mapping indicates the block has excellent oil exploration potential and multiple leads have been identified, with 80 kilometers of 3D seismic planned to be acquired this year in preparation for exploration drilling in the second quarter of 2011. The transfer of operatorship and working interest is subject to Colombia's National Hydrocarbon Agency approval, which is expected to take approximately three months.
Due to a recent disruption of the Ecopetrol operated OTA pipeline on August 16, 2010, production from the Putumayo Basin has been reduced. Current net production is expected to be maintained between 5,000 to 7,000 barrels of oil per day while pipeline repairs are made. Repairs are expected to take approximately two weeks.
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE Amex Exchange (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra Energy holds interests in producing and prospective properties in Argentina, Colombia and Peru, and has opened a business development office in Rio de Janeiro, Brazil. Gran Tierra Energy has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth.
Gran Tierra Energy's Securities and Exchange Commission filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
Forward Looking Statements:
This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 - Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995. The use of the words "expect", "anticipate", "potential", "will" and "scheduled" identify forward-looking statements. In particular, but without limiting the foregoing, this news release contains forward-looking statements regarding planned and expected testing and results regarding Moqueta-1, Moqueta-2, Moqueta-3 and Moqueta-4 and the Popa-3 appraisal well, and planned construction of the pipeline from Moqueta to the Costayaco facilities.
The forward-looking statements contained in this news release are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements, including, among others: Gran Tierra Energy's operations are located in South America, and unexpected problems can arise due to guerilla activity, technical difficulties and operational difficulties which impact or delay its testing and drilling operations; geographic, political and weather conditions can impede testing and drilling operations; and the risk that current global economic and credit market conditions may impact oil prices and oil consumption more than Gran Tierra Energy currently predicts, which could cause Gran Tierra Energy to modify its exploration activities. Further information on potential factors that could affect Gran Tierra Energy are included in risks detailed from time to time in Gran Tierra Energy's Securities and Exchange Commission filings, including, without limitation, under the caption "Risk Factors" in Gran Tierra Energy's Quarterly Report on Form 10-Q filed August 6, 2010. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and Gran Tierra Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation.