Three appraisal wells added to 2013 Moqueta drilling program after Moqueta-11 tests almost 1,600 BOPD
CALGARY, Alberta, October 16, 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 a production and operations update for its 2013 work program.
“Gran Tierra Energy continues its operational momentum with strong corporate wide production in the third quarter, the successful testing of Moqueta-11 and the addition of three appraisal wells to this year’s program to further define new reserve potential in the Moqueta field in the Putumayo Basin, Colombia,” said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. “The Moqueta-11 well tested two zones separately at a combined rate of almost 1,600 barrels of oil per day which should contribute to the growing production profile at the Moqueta field expected in 2014. Continued strong production and transportation performance throughout our portfolio has now led to another increase to Gran Tierra Energy’s full-year production expectations,” concluded Coffield.
Production for the third quarter of 2013 averaged approximately 22,500 barrels of oil equivalent per day (“BOEPD”) net after royalties (“NAR”) before adjustment for inventory changes or 22,000 BOEPD NAR adjusted for inventory changes (97% oil). Production for the third quarter of 2013 consisted of 18,900 barrels of oil per day (“BOPD”) NAR in Colombia, 2,800 BOEPD NAR in Argentina (82% oil) and 800 BOPD NAR in Brazil, all before inventory changes.
Production for the third quarter of 2013 was above expectations due to the continued strong reservoir performance from the Costayaco field and successful execution of transportation strategies. As a result, Gran Tierra Energy anticipates 2013 average production to range between 21,500 and 22,500 BOEPD NAR before adjustment for inventory changes, an increase from the company's prior projections of 21,000 to 22,000 BOEPD NAR before adjustment for inventory changes. Approximately 96% of this production is expected to consist of light oil, with the balance consisting of natural gas.
Chaza Block, Putumayo Basin (100% working interest and operator)
The Moqueta-11 appraisal well was drilled to the southern flank of the Moqueta structure and encountered oil in the T-Sandstone and Caballos formations. The T-Sandstone formation consisted of 81 feet true vertical depth (“TVD”) gross reservoir or 65 feet TVD of net reservoir thickness. It was perforated and tested from 6,812 feet to 6,912 feet measured depth (“MD”) for 46 hours at an average rate of 802 BOPD of 27.2° API oil with a 0.3% water cut. The underlying Caballos formation consisted of 237 feet TVD gross reservoir or 144 feet TVD net reservoir thickness. It was perforated and tested from 7,043 feet to 7,333 feet MD for 65 hours at an average rate of 756 BOPD of 27.4° API oil with a 0.3% water cut. The well was tested with a hydraulic jet pump. The top of the Villeta T-Sandstone is approximately 290 feet lower in the Moqueta-11 well compared to the lowest known oil encountered in the field at Moqueta-7 well, suggesting the oil column is 290 feet thicker than previously defined. The gross oil column in the Villeta T-Sandstone has now grown to 765 feet and the gross oil column in the underlying Caballos reservoir has now grown to 960 feet.
Results to date indicate additional oil potentially exists further down the flank of the Moqueta structure. As a result, three new appraisal wells have been added to the 2013 Moqueta work program. The Moqueta-12 appraisal well began drilling on September 23, 2013, and is targeting a reservoir that is further south in a previously untested block approximately 270 feet down dip of the lowest known oil encountered at Moqueta-11.
Gran Tierra Energy intends to drill two additional wells adjacent to the Moqueta field before year-end. The Corunta-1 well is expected to spud in November and be drilled in a northeast direction from the Costayaco-17 well pad targeting what is believed to be a downthrown fault block extension west of the Moqueta field. The Zapotero-1 well is expected to spud in December and target the southeastern portion of the Moqueta structure.
Guayuyaco Block, Putumayo Basin (70% Working Interest and operator, Ecopetrol 30% Working Interest)
The Miraflor West-1 exploration well on the Guayuyaco Block, targeting the same Cretaceous sandstone reservoirs encountered at the Costayaco and Moqueta oil fields, is expected to spud in November 2013.
Llanos-22 Block, Llanos Basin (Gran Tierra Energy 45% Working Interest, CEPSA 55% Working Interest and operator)
The Mayalito-1 exploration well is drilling ahead and is expected to reach total depth (“TD”) in October. This well will explore a shallow prospect and test additional deeper hydrocarbon bearing zones encountered but not tested by the successful Ramiriqui-1 oil discovery well.
Gran Tierra Energy is preparing to re-enter and isolate the final two fracture stages at the 1-GTE-6HP-BA well, on Block REC-T-129, prior to re-testing the Gomo shale interval. The micro-seismic data acquired during the fracture stimulation at 1-GTE-6HP-BA suggested that the final two fracture stages had greater fracture heights than expected and inadvertently fracked into a lower saline water bearing zone.
1-GTE-7HPC-BA is a sidetrack from the 1-GTE-7HP-BA wellbore on Block REC-T-155 and is also targeting the Gomo shale oil interval. The intent was to drill a 1,640 foot horizontal section; however, due to wellbore stability issues the well reached TD with a 440 feet horizontal section. The wellbore is currently suspended awaiting fracture stimulation which is planned for early December.
The 1-GTE-8-BA exploration well is a deviated well targeting the Gomo shale oil interval on Block REC-T-155. Gran Tierra Energy met its primary objective which was to cut and retrieve core from the target interval; 144 feet of core was successfully retrieved for detailed special core analysis studies to gain critical information regarding the oil shale play. The wellbore is currently suspended awaiting fracture stimulation which is planned for mid-November.
Gran Tierra Energy received a payment of approximately $54 million (before income taxes) in connection with termination of a farm-in agreement in the Recôncavo Basin relating to blocks REC-T-129, -142, -155 and -224. The payment will be recorded in Gran Tierra Energy’s third quarter 2013 results as a credit to its capital pool and an associated income tax expense. Gran Tierra Energy retains 100% working interest in these blocks.
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.
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 “should”, “anticipate”, “will”, “intends”, “planned”, “expected” and “potentially” 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 Gran Tierra Energy’s 2013 average production rates and the product mix of such production, its anticipated production, exploration and development activities, expected benefits from testing, and expected timing of activities and results.
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 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: test results provide only an indication of resource amounts and are not conclusive as to actual resource amounts, which may be substantially different than indicated by the test results; 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; and production data should be considered preliminary until a full well test interpretation has been done. 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, 2013. 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.
A barrel of oil equivalent (“BOE”) is calculated using the conversion factor of six thousand cubic feet (“Mcf”) of natural gas being equivalent to one barrel of oil. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf : 1 barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 barrel of oil would be misleading as an indication of value.