CALGARY and LONDON, Aug. 6 /CNW/ - Solana Resources Limited (TSX-V: SOR; AIM: SORL) is pleased to announce that the Costayaco-5 well, a down dip field delineation well located approximately 1,120 meters west of Costayaco-2 and 1,060 metres north west of Costayaco-1, has been successfully drilled, logged and cased. Initial evaluation indicates that Costayaco-5 has potential oil pay in four separate formations.
The Costayaco field was discovered in the second quarter of 2007 and is located in the Chaza block, Putumayo Basin, southern Colombia. The field is currently producing approximately 7,000 barrels of oil per day ("bopd") gross, 3,220 bopd net of royalty to Solana.
Solana holds a 50% working interest in the Chaza block with Gran Tierra Energy Inc., the operator, holding the balance. This block is subject to an Agencia Nacional de Hidrocarburos contract.
Chaza Block: Costayaco Field
Costayaco-5 Drilling and Testing
Costayaco-5 reached a total measured depth of 8,703 feet on July 27, 2008, encountering the same reservoir sequences as the other Costayaco wells with good oil shows in the Rumiyaco Kg formation, the Villeta U and T formations and the Upper Caballos formation.
Initial log interpretations, combined with cuttings and shows indicate excellent reservoir with fair to good oil saturations in the primary Villeta T formation, with thicknesses comparable to previous wells in the field. No definitive oil-water contact is apparent in the Villeta T however, testing will be required to confirm whether water is present in certain intervals. The Upper Caballos also appears to have good oil saturations and thicknesses comparable to previous wells drilled in the field. The Lower Caballos is well developed, but appears to be water bearing. The top of the Villeta T and the top of the Caballos were encountered at shallower depths than expected and oil shows were encountered deeper than expected in both the Villeta T and the Upper Caballos reservoirs; both results have the potential to add significant reserves to the west flank of the field. Testing operations are expected to commence in mid August and will take approximately one month to complete.
Costayaco-4 Testing
Costayaco-4 testing is expected to commence in early August, 2008; delayed due to the test rig being retained for longer than expected on another location. At Costayaco-4 initial log interpretations, combined with core samples and hydrocarbon shows, indicate reservoir quality sandstones with approximately 16 ft of potential oil pay in the Rumiyaco Kg, 18 feet in the Villeta U, 38 feet in the Villeta T, and 134 feet in the Caballos formations. This is approximately 25% more potential net pay than in any of the previous three wells in the field. The testing program is expected to take approximately one month.
Additional Drilling
A continuous delineation and development drilling campaign in the Costayaco field is planned for the balance of 2008 and through 2009. The details of this program will be finalized in the fourth quarter of 2008.
Infrastructure
An 8 inch diameter, 10 kilometer pipeline from the Costayaco field to the Uchupayaco Station on the existing pipeline system was completed on July 29, 2008, and is currently being tested. This new pipeline will have a capacity of 25,000 barrels oil per day ("bopd"). Initial throughput will be approximately 8,500 bopd due to downstream pipeline constraints. Options to increase production utilizing trucks to bypass infrastructure constraints, and to move additional volumes north to Neiva, are being developed with gross Costayaco field production expected to rise to 13,000 to 15,000 bopd by year end 2008, with additional production capacity behind pipe.
Additional infrastructure expansion to accommodate the anticipated increase in production from the continuing Costayaco drilling program and to negate the need for trucking is advancing.
Llanos Basin: Guachiria Block:
Primavera-1 Extended Term Test
The Company has obtained necessary approvals and plans to initiate a long term test at Primavera-1 within the next week. Primavera-1 was drilled in February - March 2008, and tested in May 2008. Eight feet of perforations in the Carbonera C-7 formation tested at a pump constrained rate of 650 bopd (gross), 365 bopd net of royalty to Solana, over a continuous 24 hour period. The well produced with a stable water cut of approximately 58% during this production period.
Los Aceites-1 Drilling
Drilling commenced on the Los Aceites-1 exploration well on August 2, 2008. This well is testing a closed structure that was defined with 3-D seismic and is targeting the Carbonera C5 and C7 formations. Los Aceites-1 is approximately 3.3 kilometers south of, roughly 80 feet structurally higher than, and on trend with the Primavera-1 well that tested 650 bopd from the Carbonera C-7 formation. The well has a projected depth of 7,100 feet and is anticipated to take 20 days to drill, with testing to follow.
Solana is the operator and holds a 100% working interest in the Guachiria block with Lewis Energy Colombia holding a 30% beneficial interest. The block is subject to an Agencia Nacional de Hidrocarburos contracts with a 13% overriding royalty payable to Ecopetrol that is applied after government royalties.
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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