CALGARY, June 5 /CNW/ - Solana Resources Limited which conducts
exploration development and production activities in 14 blocks in Colombia
announces preliminary results of the three well Llanos drilling program which
began in late March, 2006.
The three well drilling program has resulted in two wells capable of oil
production and one well which is still drilling and which will be tested.
Bonaire 1
The Bonaire 1 well, drilled in the 70% Solana owned Guachiria Norte
block, was spudded on March 31, 2006. This well was drilled to final total
depth of 7,800 feet, logged and casing was run. The rig was released on
April 21, 2006 and subsequent operations carried out with a workover rig. The
total cost of drilling, completing and testing the well was approximately $
3.5 MM - this compares to a pre drill estimate for a completed and tested well
of $US 5.0 million.
The Bonaire well was tested over two intervals; a lower one from 7,314 to
7,326 feet which produced formation water and an upper one from 7,135 to
7,145 feet which produced oil. The latter produced 20 barrels of high quality
(38 degree API) oil with essentially no water on test after swabbing. A down
hole jet pump was installed in an attempt to establish a sustainable
production rate. As of the time of this update, 8 barrels of oil have been
produced in 13 hours. This is not typical of the sands in the area and
additional studies will be undertaken to determine the reason for the low
productivity and to determine if some form of stimulation might contribute to
higher flow rates. Bonaire 1 is located an all season road approximately 7
kilometres north of the producing Solana Bucaro 1 well. Any oil produced at
Bonaire 1 would be expected to be trucked to Bucaro for processing.
Solana employed the Schlumberger Ecoscope(TM) Logging-While-Drilling
system in the Bonaire 1 well. According to Schlumberger this was the first
deployment of this new technology in Colombia. Its use allowed Solana to drill
the well cost effectively and to obtain better down hole information than
possible with previously existing technology. Solana has also used this
technology in the two wells described below.
Yalea 1
The Yalea 1 well, drilled in the 60% Solana owned Guachiria block, was
spudded on April 28, 2006 with the same rig which drilled the Bonaire 1 well
discussed above. The well reached final total depth of 7,500 feet in 15 days
and was completed as an oil producer. The total cost to drill, complete and
test this well is estimated at $US 3.4 million, compared to a pre-drill
estimate of $US 5.2 million.
The Yalea 1 well was tested with a workover rig from May 27 to June
4, 2006. The Carbonera C4 sands were tested over the interval 6,739 - 6,749
feet and produced high quality (34 degree API) oil. Swabbing of this interval
recovered 144 barrels of oil over a 10 hour period. The well is currently
being completed with a jet pump to initiate commercial production.
The Yalea 1 well is located 1.7 kilometers south of the producing Bucaro
1 well described above and it is expected that oil from Yalea 1 will initially
be trucked to the facilities at Bucaro 1.
Gaviotas 1
The Gaviotas 1 well, drilled on the 50% Solana owned Gaviotas block was
spudded on April 21, 2006 and is currently at a final total depth of 12,802
feet. The well reached the original program total depth of 12,000 feet on
May 17 after 27 days of drilling. An analysis of log and drilling data at that
time indicated that the primary reservoir target in the well, the Mirador
sands, contained oil shows sufficient to warrant testing. Consequently casing
was run to protect these sands. In view of the fact that the Mirador and
underlying Barco formations had been encountered approximately 70 feet higher
than expected it was decided to deepen the well to test other prospective
formations; including the Gacheta which is productive in oil fields near
Gaviotas 1.
The cost to drill and complete the well to the programmed total depth of
12,000 feet was $US 4.2 million. This compares to a pre-drilling cost estimate
of $US 5.9 million. The final well cost, including the cost to deepen the well
beyond its original target depth, is expected to be approximately $US 5.0
million.
Summary
Solana operates all of the blocks discussed above and paid 40% of the
cost of the Bonaire well, 35% of the cost of the Yalea well and 0% of the cost
of the Gaviotas well with the remainder of the costs being borne by various
farminees. The Guachiria block which contains the Yalea 1 well and the
Gaviotas block which holds the Gaviotas 1 well are held under modified
Association Contract terms by which Ecopetrol, the Colombian state oil
company, agreed to surrender its 30% back in right in exchange for a 13%
royalty in addition to the normal 8% state royalty. The Guachiria Norte block,
containing the Bonaire 1 well is held, under terms of the new ANH contracts
which were introduced in 2004.
The Gaviotas 1 well was drilled with a rig operated by a Colombian
contractor, Pexin. Solana has previously announced a two year agreement with
Pexin which confers on Solana a first right to use this drilling rig at market
rates and with Solana holding the right to mobilize the rig at cost.
The wells described above fulfill the current commitments for Solana on
the Guachiria, Guachiria Norte, and Gaviotas blocks in the Llanos basin.
Depending upon the results of the production obtained from the Yalea and
Bonaire wells and the planned testing of the Gaviotas well additional
development wells may be required on some or all of these discoveries. Solana
has completed extensive 2D seismic surveys on all of these areas within the
past six months and the location of any required follow up wells will based on
that seismic data.
Menno Wiebe, Vice President Exploration of Solana, a Petroleum Geologist,
is the qualified person that has reviewed the technical information contained
in this press release.
Solana is a resource exploration and production company headquartered in
Calgary, Alberta, Canada. The Company is engaged in the exploration for and
the acquisition, development and production of oil and natural gas. The
Company's exploration and development properties are located in Colombia,
South America through its wholly owned subsidiary, Solana Petroleum
Exploration Colombia Limited ("Solana Colombia").
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.
