Exploration Operations Advance in Colombia, Peru and Argentina
CALGARY, Alberta, April 16, 2008, Gran Tierra Energy Inc. (AMEX: GTE; TSX: GTE), a company focused on oil exploration and production in South America, today announced that it had completed initial testing operations on Costayaco-3, a new well drilled in the recently discovered Costayaco Field in Colombia. Gran Tierra Energy also updated progress being made with additional drilling activities and production infrastructure development.
Costayaco-3, Chaza Block
On April 6, Gran Tierra Energy completed initial testing operations for Costayaco-3, the third well drilled in the Costayaco field, a new oil field discovered in 2007. The Costayaco field is located in the Chaza Block in the Putumayo Basin, where the company has a 50% interest and is the operator, with Solana Resources holding the remaining 50% interest. The well drilled through the same reservoir sequences encountered in Costayaco-1 and -2, reaching a total depth of 8,620 feet on February 20. Log interpretations from data acquired during drilling indicate potential hydrocarbon pay in the Kg Sand Unit of the Rumiyaco Formation, the U Sandstone Unit of the Villeta Formation, the T Sandstone Unit of the Villeta Formation and the Caballos Formation. Gran Tierra Energy implemented a drill-stem test (DST) and flow-test (FT) program to evaluate the Caballos Formation and the T Sandstone Unit, the two primary reservoirs in the Costayaco Field. The shallower reservoirs will be tested and considered for completion later in field life when the primary reservoirs become depleted.
DST-1 (8,514 - 8,528 and 8,533 - 8,537 foot measured depth interval; 18 feet of perforations) tested an apparent water leg in the Lower Caballos Formation. 325 barrels of water with no oil was obtained by swabbing.
DST-2: (8,490 - 8,502 foot measured depth interval; 12 feet of perforations) further tested the apparent water leg in the Lower Caballos Formation. 160 barrels of water with no oil was obtained by swabbing.
DST-3: (8,470 - 8,480 foot measured depth interval; 10 feet of perforations) tested an apparent oil leg in the Lower Caballos Formation. 141 barrels of oil with no water was obtained by swabbing.
FT-1 (8,376 - 8,386, 8,392 - 8,404, 8,406 - 8,424 and 8,436 - 8,458 foot measured depth intervals with 62 feet of perforations in the Upper Caballos Formation; and 8,242 - 8,264, 8,270 - 8,282 and 8,295 - 8,305 foot measured depth intervals with 44 feet of perforations in the T Sandstone Unit) tested both the upper Caballos Formation and T-Sandstone Unit combined. A maximum natural flow rate of 2,543 BOPD of 30.2 API oil was obtained through a 128/64 inch choke with only a trace (0.1%) of water. At the end of the 36 hour test the flow rate was still increasing.
Results of the testing program confirm an oil-water contact at approximately 8,486 feet measured depth in the lower Caballos Formation. This is the first definitive identification of an oil-water contact in the Costayaco field. This data will allow reserves in the Caballos Formation to be more accurately calculated and will allow full-field development planning for this interval to begin. No evidence of an oil-water contact has been identified in the shallower pay zones; further delineation drilling will be required to determine the oil-water contact in the T Sandstone Unit. Final completion operations are currently underway in preparation for selected interval testing and long term testing in Costayaco-3.
Costayaco-4, Chaza Block
Drilling operations are continuing at Costayaco-4. This is a deviated well being drilled from the Costayaco-2 pad, and will have a bottom-hole location approximately 541 meters to the north. The drilling is expected to be completed in late May and will include coring of key reservoir intervals. Testing of Costayaco-4 will follow. The company plans to drill Costayaco-5, -6 and -7 during 2008.
Putumayo Basin Operations
The company has programmed a Long Term Test for Costayaco-2 in the next four months. Long Term Test production rates for Costayaco-2 will vary from 1,800 BOPD to 3,500 BOPD from different zones which will be determined and adjusted during the testing period. A Long Term Test is currently being designed for Costayaco-3 as well.
Gran Tierra Energy expects construction of an 8 inch 10 kilometer pipeline from Costayaco-1 to Uchupayaco to begin in mid-April and to be completed in mid-July. This production line will replace the current trucking operations.
The company is continuing work to reduce production constraints beyond Uchupayaco in order to accommodate planned production growth from Costayaco, which is expected to rise to 6,000 - 9,000 BOPD gross during the second half of 2008.
Gran Tierra Energy is currently evaluating a second stage of infrastructure expansion to incorporate additional drilling through the balance of 2008 and potentially into 2009.
Popa-2 Exploration Well, Rio Magdalena Block
The company has nearly completed location construction for the Popa-2 exploration well in the Rio Magdalena Block in the Middle Magdalena Basin, with drilling expected to begin April 24. This well will be drilled near a non-commercial oil discovery made by Gran Tierra Energy in 2006 at Popa-1, which tested approximately 160 BOPD. Gran Tierra Energy is the operator of the Rio Magdalena Block and has a 100% working interest. Under the terms of a recently completed farmin agreement, Omega Energy Colombia will earn a 60% share of the company's interest. In the event of a commercial discovery, Ecopetrol S.A. has a right to back in for a 30% working interest, to be split proportionally between Gran Tierra Energy and Omega Energy Colombia.
The company is continuing planning for the work-over of the Palmera-1 well, an exploration well drilled in 1996 that had potential oil pay indicated on logs but which was never tested. Operations are scheduled to begin in late April. In addition, the company is continuing to interpret newly acquired 3-D seismic data in preparation for drilling an exploration well in the fourth quarter of 2008. Gran Tierra Energy is operator of the Azar Block and has a 40% working interest.
The company is continuing to acquire approximately 20,000 linear kilometers of new high definition airborne gravity and magnetic data over the entire area of Blocks 122 and 128. Approximately 16,926 linear kilometers, or 85% of the program, has been acquired to date. This data will be used to define exploration leads over which 2-D seismic data will be acquired in the Second Exploration Period of each block. Block 122 encompasses approximately 1.2 million acres and Block 128 encompasses approximately 2.2 million acres of land. Gran Tierra Energy is operator and holds a 100% working interest in both exploration blocks.
The company is continuing with well design, rig contracting, and planning for the drilling of the Proa-1 exploration well in the Surubi Block in the Noroeste Basin of northern Argentina during the third quarter of 2008. Gran Tierra Energy is operator and has a 100% working interest in this block. In addition, technical evaluation work and a variety of well work-overs continue in Gran Tierra Energy's other six landholdings in the basin.
Commenting on progress, Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy Inc., stated, "The extension of high-quality, oil-bearing reservoir further down the flanks of the Costayaco field increases the recoverable reserve potential of the field. In addition, the identification of an oil-water contact in the lower of two major reservoirs in the Costayaco oil discovery should allow us to quantify those additional reserves and accelerate the pace of field development planning. We are on track in executing our strategy of continuing field delineation drilling and production testing operations, new exploration drilling operations, and new exploration data acquisition operations taking place across our three operating arenas of Colombia, Peru, and Argentina."
About Gran Tierra Energy Inc.:
Gran Tierra Energy Inc. is an international oil and gas exploration and production company operating in South America, headquartered in Calgary, Canada, incorporated in the United States, and trading on the American Stock Exchange (GTE) and the Toronto Stock Exchange (GTE). The company holds interests in producing and prospective properties in Argentina, Colombia and Peru. The company has a strategy that focuses on growing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth. Additional information concerning Gran Tierra Energy is available at www.grantierra.com. Investor inquiries may be directed to [email protected] or 1-800-916-GTRE (4873).
Forward Looking Statements:
The statements in this news release regarding Gran Tierra Energy's plans and expectations for testing and drilling, expectations as to results of these testing and drilling operations and infrastructure, the use to which acquired seismic data will be put, the benefits that will result from the identification of the oil-water contact in the Costayaco discovery, and expectations as to completion of the pipeline from Costayaco-1, are forward looking information, forward looking statements or financial outlooks (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. These forward-looking statements 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. Although, Gran Tierra Energy believes that the assumptions underlying, and expectations reflected in, these forward-looking statements are reasonable, it can give no assurance that these assumptions and expectations will prove to be correct. Important factors that could cause the results or outcomes discussed herein to differ materially from those indicated by these forward-looking statements, include, among other things: 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 the production, transport or sale of its products, and geographic, political and weather conditions; and the usefulness of the seismic data and benefits of the discovery of the oil-water contact may be different than Gran Tierra Energy predicts. Further information on potential factors that could affect Gran Tierra are included in risks detailed from time to time in Gran Tierra's Securities and Exchange Commission filings, including, without limitation, under the caption "Item 1A - Risk Factors" in Gran Tierra's Annual Report on Form 10-K for the period ended December 31, 2007, filed with the Securities and Exchange Commission on March 14, 2008. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov. The forward-looking statements contained herein are made as at the date of this press release. Gran Tierra does not undertake an obligation to update forward-looking or other statements in this release. Gran Tierra's forward-looking statements are expressly qualified in their entirety by this cautionary statement.