Revised drilling timelines for upcoming wells and third quarter production expectations
CALGARY, Alberta, October 7, 2010, Gran Tierra Energy Inc. ("Gran Tierra Energy") (NYSE Amex: GTE; TSX: GTE), a company focused on oil and gas exploration and production in South America, today announced preliminary results of the Moqueta-3 delineation well in Colombia and an operations update for Colombia, Peru and Argentina.
Colombia
Initial drilling and logging results have been obtained from the Moqueta-3 delineation well, with a bottom-hole location 450 meters south of the Moqueta-1 discovery well in the Chaza Block of the Putumayo Basin. Oil and gas shows were recorded through the Villeta Lower U Sandstone, the Villeta T Sandstone and the Caballos formations, with electric logs indicating total net oil pay in the Moqueta-3 well increasing to 118 feet, from 44 feet encountered in the Moqueta-2 delineation well. As a result of these initial indications of increased oil pay, a test program is being designed to confirm the fluid content and productivity of the encountered zones. This test program is expected to start immediately and take approximately three weeks to complete.
Log evaluation shows that the Villeta Lower U Sandstone reservoir has approximately 14 feet of net pay, with no evidence of gas as found in the Moqueta-1 well, suggesting the section may be oil bearing.
Oil and gas shows encountered during drilling and log interpretations from data acquired after drilling, indicate the presence of oil-bearing reservoir sandstones in the underlying Villeta T Sandstone beginning at 4,545 feet measured depth ("MD") or 4,265 feet true vertical depth ("TVD") with an approximate potential net oil pay thickness of 53 feet. Both well logs and pressure gradient data obtained with a wireline testing tool indicate the entire T Sandstone reservoir is oil bearing in contrast to Moqueta-1 and Moqueta-2, where the zones were gas bearing.
The underlying Caballos formation was encountered at 4,682 feet MD or 4,402 feet TVD with approximately 51 feet of potential net pay interpreted from the well logs, consisting of approximately 31 feet of potential net oil pay in the uppermost Caballos sandstone reservoir and 20 feet of potential net oil pay in the Middle Caballos reservoir. In contrast, these zones were interpreted as gas bearing in the Moqueta-1 and Moqueta-2 wells. No oil-water contact was identified for the Upper and Middle Caballos intervals. Subject to successful testing and subsequent delineation drilling, there remains potential for additional oil down-dip. The Lower Caballos reservoir has 29 feet of net reservoir with lower oil saturations than found at Moqueta-1 and Moqueta-2. The fluid type is not conclusive and this reservoir is not included in net pay; however, it will be tested to confirm the fluid type.
The Moqueta-4 delineation well will be located approximately 1.5 kilometers southwest of Moqueta-1. The main objective is to delineate the Moqueta discovery as no gas-water or oil-water contact is evident in the existing wells. We intend to drill further down-dip with the Moqueta-4 well, and as demonstrated in Moqueta-2 and Moqueta-3, drilling down-dip has the potential to extend the oil columns encountered.
Gran Tierra Energy has completed 20% of a new 3D seismic acquisition program on the western portion of the Moqueta area in the Chaza block. It is anticipated that the seismic program will continue to provide additional subsurface information to assist in Gran Tierra Energy's interpretation of the Moqueta field and adjacent prospectivity.
Design and land negotiations associated with the Moqueta to Costayaco pipeline are currently underway. Upon completion of the land negotiations, the application for an environmental permit will be submitted. Construction of the eight kilometer pipeline is expected to be undertaken in fourth quarter of 2010 with long-term flow testing expected to begin in the first quarter of 2011.
At the Costayaco field, the construction of a water injection facility was completed in September 2010. Gran Tierra Energy has commenced water injection through the Costayaco-5 well into the T Sandstone reservoir. By increasing the reservoir pressure, Gran Tierra Energy anticipates improving the recovery factor of oil reserves in the Costayaco field.
Exploration Wells
In addition to the drilling rig operating in the Moqueta field, Gran Tierra Energy has contracted two additional drilling rigs in Colombia, which are expected to drill the Pacayaco-1 and Taruka-1 prospects in the Chaza and Piedemonte Sur blocks, respectively. Civil construction is currently underway for the Pacayaco-1 and Taruka-1 well sites, while surface access negotiations are ongoing for the Canangucho-1 well in the Chaza block. Taruka-1 is expected to spud in December, 2010, while Canangucho-1 is expected to spud the first quarter of 2011. Pacayaco-1 is on trend and west of the Moqueta discovery and is expected to spud late October, 2010.
Argentina
In the Valle Morado field, the workover and sidetrack operations on the VM.x-1001 wellbore are proceeding. The condition of the existing wellbore is worse than expected and sidetrack options are currently being reviewed.
Peru
Gran Tierra Energy has concluded acquiring 260 kilometers of 2D seismic on Block 128 in Peru and will be moving to Block 122 to begin seismic acquisition operations. The drilling rig is currently being mobilized to Peru. The expected spud date for the first well in the Peru program on Block 128, Kanatari-1, is December, 2010. Gran Tierra Energy has now received all necessary seismic and drilling approvals for Block 122 and Block 128.
Brazil
An application for approval of the acquisition of a 70% interest in Blocks REC-T-129, -142, -155 and -224 in the on-shore Rec ncavo Basin, Brazil has been submitted for regulatory approval from Brazil's Ag ncia Nacional de Petr leo G s Natural e Biocombust veis ("ANP").
Production Update
In the third quarter 2010, Gran Tierra Energy preliminary estimates production of 13,200 barrels of oil per day (BOPD) net after royalty. This falls below the company's previously disclosed full year estimate of between 14,000 and 16,000 BOPD, net after royalty. Significantly impacting production were OTA pipeline disruptions, leading to twenty-two days of downtime in the third quarter. The OTA pipeline was back in service on September 20, 2010 with current production from all Gran Tierra Energy properties of approximately 15,000 BOPD net after royalty, including approximately 14,200 BOPD from Colombia and 800 BOPD from Argentina.
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, Peru and 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", "suggests" and "scheduled" identify these 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-3 and Moqueta-4, potential for additional oil down-dip, anticipated information from Gran Tierra Energy's seismic acquisition program, timing of submission of environmental permits, planned construction of the pipeline from Moqueta to the Costayaco facilities, anticipated improvement in the recovery factor of oil reserves in the Costayaco field, expected drilling and spudding of the exploration wells, and expected seismic operations and spud date in Peru.
The forward-looking statements contained in this news release reflect several material factors and expectations and assumptions of Gran Tierra Energy including, without limitation, assumptions relating to log evaluations, that Gran Tierra Energy will continue to conduct its operations in a manner consistent with past operations, the effects of drilling down-dip and the general continuance of current or, where applicable, assumed operational and industry conditions. Gran Tierra Energy believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct.
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.
Contact Information
Additional information is available on Gran Tierra Energy's website at www.grantierra.com. For media and investor inquiries please contact Jason Crumley, Director, Investor Relations at 403-265-3221 or [email protected].