CALGARY, and LONDON, Dec. 11 /CNW/ - Solana Resources Limited (TSX-V: SOR; AIM: SORL) is pleased to announce that the Costayaco-2 well located in the Chaza Block, Putumayo Basin, southern Colombia was spudded on December 6, 2007. Costayaco-2 is the second well in the Costayaco field that was discovered in the second quarter of 2007. The Costayaco-1 discovery well tested at a maximum combined rate of 5,906 barrels of oil per day ("bopd") from four separate formations. Costayaco-2 is 625 metres northeast of Costayaco-1 and is expected to penetrate the target structure at the same depth as Costayaco-1. Drilling is anticipated to take 32 days with completion and testing operations to follow. Costayaco-3, 965 meters west-southwest of Costayaco-1, will be drilled with the same rig in the first quarter of 2008, immediately following Costayaco-2. Costayaco-3 is expected to penetrate the target structure lower than Costayaco-1 and should significantly increase the Company's understanding of field size.
Costayaco-1
Costayaco-1 has been flowing from the Caballos formation at approximately 2,200 bopd (1,000 bopd net of royalty to Solana) with all production trucked to the nearby Toroyaco facility. Testing of commingled production from two zones (Caballos and Villeta T) using a jet pump is currently under way.
Seismic
The acquisition of 70 square kilometres of new 3-D seismic data over the Costayaco field and 25 line kilometres of new 2-D data over Chaza block exploration leads was completed in early December and the data is currently being processed. The interpretation results from this data will be used for planning future Costayaco wells and developing exploration plays respectively. Additionally, the Costayaco-2 and Costayaco-3 results, in combination with the new 3-D seismic data, will greatly enhance our understanding of field size and allow us to plan field development, including additional drilling, facilities and pipelines.
Infrastructure
A crude oil truck unloading facility at Uchupayaco, and the tie in of this facility into the existing 8 inch line that runs to the Santana Station has been completed. Costayaco production is now being trucked to this facility, but will ultimately flow in a 10 kilometre 8 inch pipeline from the Costayaco-1 location to Uchupayaco and into the existing pipeline system. This line is currently in the planning stages and is scheduled to be operational by June 2008.
Solana holds a 50% working interest in the Chaza Block with Gran Tierra Energy Inc., the operator, holding the other 50% interest. The Chaza block is subject to a fiscally attractive Agencia Nacional de Hidrocarburos contract with no additional state participation.
Mr. Glenn Van Doorne, Chief Operating Officer of Solana, a Petroleum Geologist, is the qualified person who has reviewed the technical information contained in this news release.
Forward Looking Statements
Certain information regarding the Company, including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, mechanical problems, equipment limitations, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources; as a consequence, actual results may differ materially from those anticipated.
Solana Resources Limited
Solana (www.solanaresources.com) is an international resource company engaged in the acquisition, exploration, development and production of oil and natural gas. The Company's properties are located in Colombia, South America and are held through its wholly owned subsidiary, Solana Petroleum Exploration (Colombia) Limited. The Company is headquartered in Calgary, Alberta, Canada.
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