CALGARY, Alberta, March 7, 2011, Gran Tierra Energy Inc. (NYSE AMEX: GTE; TSX: GTE) ("Gran Tierra Energy"), a company focused on oil and gas exploration and production in South America, today announced the Kanatari-1 exploration well in Peru encountered a thick, excellent reservoir-quality section with a thick top-seal section, but no hydrocarbons. In addition, in Colombia, initial testing of the Moqueta-4 delineation well in the Moqueta oil discovery flowed 1,674 barrels of oil per day ("BODP") without pumps from two reservoirs, and additional oil was recovered from a third reservoir by swabbing. No evidence of an oil-water contact has been identified, leaving open the potential for additional reserves down-dip.
"We are disappointed with the lack of hydrocarbon shows in the Kanatari-1 frontier exploration well, but are intrigued by the presence of a spectacular reservoir-quality sandstone section capped by a thick sealing shale section. New 2D seismic data indicates the sandstone section pinches out up-dip on the Iquitos Arch in a trapping position with considerable upside potential. With this new data, we will continue to evaluate the prospectivity of the large, unexplored acreage position we have established in this portion of Peru," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "In addition, our test results at Moqueta-4 have exceeded our expectations, with delineation and development planning continuing in our new oil discovery, along with our other ongoing exploration and development programs in Colombia."
Kanatari-1 Exploration Well, Block 128, Peru (100% Working Interest and Operator)
Kanatari-1, a frontier exploration well located on the eastern flank of the Mara on Basin, 130 kilometers east of the nearest offset well in Peru, spud on February 8, 2011 and reached total measured depth ("MD") in basement at 3,395 feet on March 3, 2011. The well encountered a sandstone reservoir sequence 932 feet thick overlying basement, which was encountered at 3,247 feet MD. Total net reservoir of 692 feet with average porosity of 25% was interpreted from wireline logs acquired after drilling. The reservoir section was overlain by 256 feet of sealing shale sequence. No oil or gas shows were noted during drilling and interpretations from wireline logs indicate the reservoirs are water bearing. Kanatari-1 will be plugged and abandoned.
Kanatari-1 confirms the presence of two key components of a petroleum system on Block 128, the presence of reservoir and seal, with petroleum migration and trapping remaining unproven. Interpretation of the well data and integration with recent 2D seismic data acquired on Block 128 indicates a potential stratigraphic pinchout play analogous to those trapping hydrocarbons in the Orinoco Belt of Venezuela exists up-dip from the Kanatari location. This potential will be the focus of Gran Tierra Energy's ongoing evaluations. Future drilling activities in Block 122 will depend on the integration of the well results to the new 2D seismic data and regional geologic model.
Moqueta-4 Delineation Well, Chaza Block, Colombia (100% Working Interest and Operator)
Gran Tierra Energy completed initial testing on the Moqueta-4 delineation well by collecting reservoir data and fluid samples from the Villeta T-Sandstone, the Lower U Sandstone and the Caballos formations.
In the Caballos formation, seven intervals totaling 74 feet were perforated and tested from 4,612 feet MD to 4,732 feet MD. Oil flowed naturally without assistance from pumps at 431 BOPD, with an oil gravity of 27.8 API and watercut of 0.5%.
In the Villeta T-Sandstone zone, three intervals totaling 39 feet were perforated and tested from 4,484 feet MD to 4,531 feet MD. Oil flowed naturally without assistance from pumps at 1,011 BOPD, with an oil gravity of 26.4 API and watercut of 0.1%.
When co-mingled, the Caballos and T-Sandstone intervals together flowed 1,674 BOPD without assistance from pumps with a watercut of 0.8%.
In the Lower U Sandstone formation, one interval totaling 26 feet was perforated and tested from 4,284 feet MD to 4,310 feet MD. A total of 18.2 barrels of oil were produced after 13 hours of swabbing operations, with an oil gravity of 16.3 API and watercut of 6%.
Data from Moqueta-4 was not included in the results of an independent reserve evaluation of the company's reserves by GLJ Petroleum Consultants Ltd. effective December 31, 2010. That evaluation, using SEC standards, assigned 1.180 million barrels of oil ("MMBO") to Proved reserves, 2.979 MMBO to Prove plus Probable reserves (2P) and 9.685 MMBO to Prove plus Probable plus Possible reserves (3P), all net after royalty. The well was drilled within the area where Possible reserves were assigned; a portion of these reserves are expected to be moved to the Proved category as a result of the Moqueta-4 test data in the next independent reserve evaluation.
As no evidence of an oil-water contact has been identified from the available well data in the four Moqueta wells drilled to date; there remains potential for additional oil down-dip on the flanks of the Moqueta structure. Plans are underway to drill Moqueta-5 from the same location as Moqueta-4. This well is expected to be drilled in April and is expected to be a deviated well drilled directionally to the south to further delineate the Moqueta oil discovery.
The construction of a six-inch diameter, eight-kilometer long pipeline from Moqueta to Costayaco facilities has commenced and construction is expected to be completed by the end of April, 2011. Long term testing of the Moqueta oil wells is expected to then commence upon the completion of construction.
Canangucho-1 Exploration Well, Chaza Block, Colombia (100% Working Interest and Operator)
The Canangucho-1 exploration well located to the east of the Costayaco field is drilling ahead with initial results expected in late March.
Juanambu-3 Development Well, Guayuyaco Block, Colombia (70% Working Interest and Operator)
The third and final development well in the Juanambu oil field has begun drilling. This well is expected to take approximately 30 days to drill and is expected to be tied into existing facilities upon completion.
Corporate production for Gran Tierra Energy has averaged approximately 13,500 BOPD, net after royalty ("NAR"), in February, 2011, up from approximately 12,200 BOPD NAR in January, 2011, as production was ramping up through the month following upgrade activities at Tumaco port. Production is currently averaging approximately 15,900 BOPD NAR.
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.
Advisories and Forward Looking Statements:
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% possibility that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation.
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","potential" and "will" identify these forward-looking statements. In particular, but without limiting the foregoing, this news release contains forward-looking statements regarding continued evaluation of the prospectivity of Gran Tierra' position in Peru, plans to plug and abandon Kanatari-1, planned and expected testing and results regarding Moqueta-4 and the new potential believed to exist including the potential for re-classification of certain reserves, along with expected drilling of Moqueta-5, the timing of construction and completion of a pipeline to connect Moqueta to existing infrastructure at Costayaco facilities, and the timing of drilling of Canangucho-1 and a new well in the Juanambu oil field and connection of that well to existing facilities.
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, the accuracy of certain testing results and seismic data, 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, drilling and/or construction 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 Annual Report on Form 10-K filed February 24, 2011. 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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