San Angel Exploration Well Encounters Gas Shows, Testing Initiated; Canangucho-1 Exploration Well Plugged and Abandoned and Moqueta-5 Delineation Well Expected to Spud This Week
CALGARY, Alberta, April 6, 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 a drilling and operations update in the Putumayo and Lower Magdalena Basins of Colombia, an acreage update in Argentina, and a general Corporate update.
Magdalena Block, Lower Magdalena Basin (100% working interest and Operator)
Drilling and logging of the San Angel-1 natural gas exploration well in the Magdalena Block of the Lower Magdalena Basin has been completed. Gas shows were encountered over two intervals totaling 415 feet (gross). Wireline logs and repeat formation tester data was not conclusive in quantifying reservoir quality or gas saturation. Testing operations have been initiated and are expected to be completed in late April, 2011.
Chaza Block, Putumayo Basin (100% working interest and Operator)
The Canangucho-1 exploration well reached total true vertical depth of 9,667 feet on March 23, 2011. After the evaluation of wireline logs, it was determined that the T Sandstone and Caballos formations were water bearing. The Canangucho well was plugged and abandoned.
The Moqueta-5 delineation well is expected to start drilling this week from the same well pad as the Moqueta-4 delineation well. New 3D seismic acquisition is expected to start in June 2011 and will assist in the site location for the Moqueta-6 delineation well expected to start drilling in the fourth quarter, 2011. The Moqueta to Costayaco flow line is currently under construction with the first long-term production test anticipated to start in May.
Development of the Costayaco field continues with the drilling of Costayaco-12 and -13. Costayaco-12 was completed and placed on production at approximately 600 barrels of oil per day. Completion and testing operations are currently ongoing at Costayaco-13. Both wells are expected to be converted to water injectors once the oil reserves are depleted around their respective drainage areas.
Guayuyaco Block, Putumayo Basin (70% Working Interest and Operator)
The Juanambu-3 development well began drilling on March 3, 2011. Drilling operations are expected to be completed in April, 2011.
Rumiyaco Block, Putumayo Basin (100% Working Interest and Operator)
Environmental permitting has been approved for the Rumiyaco-1 exploration well in the Rumiyaco Block of the Putumayo basin. Civil construction work is expected to start in April, 2011 and the well is expected to begin drilling in July, 2011.
Gran Tierra Energy is pleased to announce it has successfully farmed out a 50% interest in its Santa Victoria block (2,091.5 km2 or 516, 815.3 acres) in the Noroeste Basin of northwestern Argentina to Apache Corporation ("Apache"). Both Gran Tierra Energy and Apache have agreed to proceed into the second exploration phase, which has a work commitment that will be fulfilled with an exploration well. Gran Tierra Energy, as operator, is interested in testing the gas potential of the Permo-Carboniferous reservoirs, a proven play in nearby wells.
Subsequent to closing the acquisition of Petrolifera Petroleum Ltd. ("Petrolifera") on March 18, 2011, company average production has been approximately 18,000 barrels of oil equivalent per day ("BOEPD"), net after royalty ("NAR"), weighted 95% to light oil. Oil production in Colombia has averaged approximately 15,000 barrels of oil per day ("BOPD") NAR, while oil production in Argentina has averaged approximately 2,300 BOPD NAR and gas production has averaged approximately 4 million standard cubic feet per day, or approximately 700 BOEPD.
In connection with the acquisition of Petrolifera, Gran Tierra Energy initially assigned no value to investments that Petrolifera held in Asset Backed Commercial Paper ("ABCP") given concerns over the liquidity of the investment. Gran Tierra Energy subsequently sold the ABCP and received a net amount of US$22.7 million including accrued interest.
Gran Tierra Energy received an average realized oil price of US$78.13 per barrel during the fourth quarter of 2010 in Colombia, reflecting a discount to West Texas Intermediate ("WTI"). In the first quarter of 2011, Gran Tierra Energy received an average realized oil price of US$95.50, reflecting a premium in the Colombia South Blend oil price over WTI.
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 (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, subject to regulatory approval, 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:
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 words such as "expect", "potential" and "will" identify these forward-looking statements. In particular, but without limiting the foregoing, this news release contains forward-looking statements regarding the expected timing of commencement of 3D seismic acquisition and its expected application, the expected conversion of Costayaco-12 and -13, and the expected timing of drilling operations of Moqueta-5 and -6 and construction of the flowline from Moqueta to Costayaco, expected timing of long-term production tests, Juanambu-3 and Rumiyaco-1 (including civil construction work), the Argentina work program and expectations of realized oil prices.
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 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 25, 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. A BOE conversion ratio of 6 thousand cubic feet to 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.
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Director, Investor Relations