CALGARY, March 2 /CNW/ - Solana Resources Limited (TSX-V: SOR; AIM:
SORL), the Colombia focused independent oil and gas exploration and production
company, today announces the successful completion of the drilling of the
Guariquies 1 well, in the Middle Magdalena Basin in Colombia. Solana operates
in Colombia through Solana Petroleum Exploration Colombia Limited, Solana's
wholly owned subsidiary.
Key Points
- The Guariquies 1 well was successfully completed as a commercial
oil producer.
- An appraisal/development program has been proposed by the operator
(Ecopetrol) to use the rig currently on location to undertake a
second well as soon as site works are completed.
- The Guariquies 1 discovery is near existing oil fields and is
located within ten kilometers of existing oil handling and
pipeline facilities.
- Nearby fields are characterized by having wells with modest
individual well production rates but having significant reserves
and relatively low development costs.
- It is expected that new discoveries can be brought on stream
quickly and without significant up front capital investment for
production facilities and pipelines.
- In recognition of the commercial completion of the well, the
transfer of interest from Ramshorn to Solana in Guariquies 1 has
been approved, so that in future wells Solana will participate
directly in the Shared Risk Contract and will pay 37.5% of the
costs and receive 33.75% of any future production.
- The Guariquies 1 well is part of an active Solana program in
Colombia consisting of approximately 700 kilometers of seismic and
ten additional exploration wells planned for the next eighteen
months.
Shared Risk Contract
The Guariquies 1 well was drilled under the terms of a Shared Risk
Contract between Ecopetrol (the Colombian State Oil Company) and Ramshorn
International ("Ramshorn"). Solana participated in the well under the terms of
a commercial agreement whereby Solana paid 96% of Ramshorn's share of the
initial well cost to casing point to earn 75% of Ramshorn's 45% working
interest. On Feb 28th 2006, in recognition of the commercial completion of the
well, Solana received notice from Ecopetrol that a transfer of interest from
Ramshorn to Solana in Guariquies 1 had been approved. In future wells Solana
will participate directly in the Shared Risk Contract and will pay 37.5% of
the costs and receive 33.75% of the production.
Drilling Result Details
The Guariquies 1 well was drilled to a final total depth of 10,243 ft.
Potential oil pay was identified in a number of zones between 5,400 ft. and
10,200 ft. The results of the drillstem tests (DST's) conducted in this well
are as follows:
- A DST of the Mugrosa interval between 5,494 ft. and 5,652 ft.
covering 3 individual sands tested 29.5 degree API oil at rates
ranging from approximately 210 bopd stabilized to a maximum of
500 bopd at an unstabilized rate. A total of 80 ft. of sand in a
net sand interval of 120 ft. with porosity greater than 15% was
perforated. The well flowed a total of 982 barrels of oil during
the testing period. Pressure buildup data indicates that the
permeability in these sands is modest and similar to that in
nearby producing fields.
- An average gas/oil ratio of 400 standard cubic feet per stock tank
barrel was recorded and no significant formation water was
recovered during the testing operations. On that basis the entire
Mugrosa section in this well is expected to be oil bearing.
- A drillstem test of the La Paz unit was conducted to test
8 individual reservoir sands in the La Paz formation over the
gross interval from 9,458 to 10,090 ft. A total of 149 ft. of sand
was perforated. The test flowed a total of 418 barrels of
32 degree API oil with no formation water. DST flow rates were
low, ranging from 0 to 380 BOPD and did not stabilize. DST
analysis indicates that this zone, despite having fair porosity
(9- 15%), has low permeability. Additional studies will be
required to determine if the productivity of this zone can be
enhanced to produce at commercial rates.
- Three additional DST's were conducted to test individual sands
10 to 30 ft. thick over the interval from 6404 ft. to 9,065 ft.
Two of these failed to recover any significant quantities of fluid
(oil or water). The third recovered 30 barrels of oil with minor
amounts of water and sediment.
Basin Characteristics
The Guariquies 1 discovery is near existing oil fields and is located
within ten kilometers of existing oil handling and pipeline facilities. A
total of 982 barrels of oil recovered in the Guariquies 1 drill stem tests has
already been trucked to this facility. Several nearby fields, including two
which have produced 100 million and 900 million barrels respectively to date,
are characterized by having wells with modest individual well production rates
but having significant reserves and relatively low development costs. In this
environment new discoveries can be brought on stream quickly and large up
front capital investment for production facilities and pipelines is not
required.
The performance of wells in nearby fields with similar characteristics
indicates that it should be possible to pump the Guariquies 1 well at 300 to
400 bopd.
Forward Program
Civil works will begin within a week at the Guariquies 1 location and are
expected to take 30 days. This will allow Guariquies 1 to be put on a long
term test with the oil being trucked to nearby production facilities.
An appraisal well, Guariquies 2, has been agreed upon by the parties and
it is expected that this will be drilled with the same rig from the Guariquies
1 location. Future wells, to test only the Mugrosa Formation to 7,000 ft. are
expected to require smaller and less expensive drilling rigs than that used to
drill the Guariquies 1 well which was drilled to 10,243 ft. in order to test
deeper zones.
The Guariquies 1 well was programmed to test several individual
objectives on a deviated trajectory. For that reason it is believed that the
Guariquies 1 well only penetrated part of the productive Mugrosa formation.
Future appraisal wells will be targeted to penetrate the full Mugrosa
formation which, based on surrounding wells, is expected to be thicker than
that tested in the current well.
Guariquies 1 took 71 days to reach the final total depth of 10,243 ft. at
a cost of approximately US $ 7.5 million. Completion of the well, remedial
cementing and subsequent testing operations took 74 days at an additional cost
of approximately US $ 5.5 million. Future development wells to test only the
Mugrosa Formation to approximately 7,000 ft are expected to cost in the range
of US $ 3 to US $ 5 million based on Solana estimates.
Stephen Newton, the Corporation's President and CEO, commented:
"We are pleased that the Guariquies l well has been completed and
identified as a commercial producer, and that the transfer of interest from
Ramshorn to Solana has been approved by Ecopetrol. The follow-up appraisal
program will allow the parties to put the proposed development plan in place."
This release may contain forward looking statements within the meaning of
the "safe harbor" provisions of US laws. These statements are based on
management's current expectations and beliefs and are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from those described in the forward looking statements. Solana does not assume
any obligation to update any forward looking information contained in this
news release.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
