Planning Horizontal Sidetrack to Implement Long Term Test and Bring New Oil to Market
CALGARY, Alberta, February 21, 2013, Gran Tierra Energy Inc. (“Gran Tierra Energy”) (NYSE MKT: GTE, TSX: GTE), a company focused on oil exploration and production in South America, today provided updates for its exploration drilling in Peru.
“Gran Tierra Energy has successfully completed initial testing of the Bretaña Norte 95-2-1XD exploration well in Peru at rates that far exceeded expectations. We are currently planning to extend the Bretaña Norte 95-2-1XD exploration well with a horizontal leg, with operations expected to commence by the end of February, to initiate long term testing and to fast-track first production from the Bretaña discovery,” said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. “This discovery has material contingent resource potential, and is expected to provide significant growth for the company and assist Perupetro in achieving its objectives to bring new oil to the market on behalf of the Government of Peru,” concluded Coffield.
Block 95 (100% working interest and operator)
Gran Tierra Energy completed initial testing of the Vivian Formation sandstone reservoir in the Bretaña Norte 95-2-1XD exploration well. Log interpretations and MDT fluid and pressure sampling had indicated the presence of an oil-bearing sandstone reservoir in the Vivian Formation beginning at 9,408 feet measured depth (“MD”) or 8,851 feet true vertical depth (“TVD”) with an approximate gross oil column thickness of 99 feet and 53 feet net pay thickness. Laboratory analyses of the oil samples indicate the oil has a gravity of 18.5 degrees API.
A drill stem test was conducted over a 29 foot interval from 9,409 feet MD to 9,438 feet MD. Approximately 1,170 barrels of oil per day (“BOPD”) was produced on natural flow without pumps for 19.65 hours with 0% water cut through a 46/64 inch choke. The choke size was then increased to a 64/64 inch and oil flow increased to approximately 1,984 BOPD on natural flow without pumps over a period of 1.5 hours with 0% water cut. Cumulative production over the testing period amounted to 1,082 barrels of oil. The wellhead flowing pressure and temperature were increasing through the test, indicating that the formation was cleaning up and oil flow was increasing over the duration of the test. The test was successfully concluded when available crude oil storage capacity had been achieved.
The horizontal sidetrack, which is expected to commence at the end of February, will be completed and used to initiate a Long Term Test (“LTT”) of the Bretaña Norte 95-2-1XD exploration well. Timing for initiation of the LTT has not been determined yet, but it is expected to commence within a period of 12 months, subject to facilities upgrade, and execution of crude oil transportation and delivery agreements.
In its press release dated June 11, 2012, Gran Tierra Energy announced the results of a contingent gross lease resource estimate for the oil discovery on Block 95, provided by its independent reserves auditor, GLJ Petroleum Consultants effective June 1, 2012, before the drilling of the Bretaña Norte 95-2-1XD exploration well. The resource estimate has been prepared in compliance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook. The estimates included a low estimate “1C” contingent resources of 11.5 million stock tank barrels of oil (“MMSTB”), a best estimate “2C” contingent resources of 31.6 MMSTB, and a high estimate “3C” contingent resources of 88.1 MMSTB. There is no certainty that it will be commercially viable to produce any portion of these resources. Additional information respecting such contingent resource estimates is included in the June 11, 2012, press release and under the heading “Forward-Looking Statements and Advisories” below.
About Gran Tierra Energy Inc.
Gran Tierra Energy is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE MKT (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra Energy holds interests in producing and prospective properties in Colombia, Argentina, 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 and Advisories
Readers are cautioned that the well-flow test results disclosed in this press release are not necessarily indicative of long term performance or of ultimate recovery.
Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status.
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 “planning”, “will”, “expected”, “estimate” and “potential” and derivations thereof and similar terms identify forward-looking statements. In particular, but without limiting the foregoing, this news release contains forward-looking statements regarding the anticipated exploration and development activities, expected drilling locations, expected benefits from testing, and expected timing of activities and results, including the expected resource potential and effect on the growth of Gran Tierra Energy from the discovery, the expected drilling of a horizontal well and the expected timing and use thereof, and the expected timing of commencement of LTT. Statements relating to “resources” are forward-looking statements as they involve the implied assessment, based on estimates and assumptions, that the resources described exist in the quantities predicted or estimated and can be profitably produced in the future. 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 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 accuracy of resource estimates; the accuracy of testing and production results and seismic data; the effects of certain drilling techniques; cost and price estimates; and the general continuance of current or, where applicable, assumed operational, regulatory 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: unexpected technical difficulties and operational difficulties may occur, which could impact or delay the completion or continuation of drilling; geographic, political and weather conditions can interrupt drilling, which could impact or delay the commencement or continuation of drilling; 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 change its current drilling, production and testing plans. 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 November 7, 2012. 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.
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