30th Jan 2007 08:07
Emerald Energy PLC30 January 2007 Emerald Energy Plc 30 January 2007 Operations Review and Update Emerald Energy Plc ("Emerald" or the "Company") is pleased to provide thefollowing update for the period since September 2006: Colombia - Exploration and Development Three new exploration and production contracts, Maranta, Ombu and Helen, havebeen added to Emerald's exploration portfolio. All three contracts have beenawarded by the National Hydrocarbon Agency of Colombia ("ANH") and a copy of themodel contract terms can be found on the ANH website (www.anh.gov.co). The Maranta contract covers an area of 365 sq. km located north-east of theproducing oil fields in the Putumayo Basin in south-west Colombia. The initialphase of the exploration period will be 18 months, commencing 12 September 2006,and the minimum work programme comprises the acquisition of 30 km of new 2Dseismic data and the re-processing of 40 km of existing 2D seismic data. Emeraldcurrently has a 100% working interest in the Maranta Contract. The Helen contract covers an area of 213 sq. km also located in the PutumayoBasin. The initial phase of the exploration period is up to 16 months months,commencing 26 December 2006, and the minimum work programme comprises theacquisition of 30 km of new 2D seismic data and the re-processing of 120 km ofexisting 2D seismic data. Emerald has entered into an agreement, subject to ANHapproval, with Vetra Group LLC. ("Vetra") under which Vetra will pay 100% of thecost of the initial phase of exploration, will be assigned an 85% interest in,and operatorship of, the Helen contract. Emerald will retain a 15% interest inthe contract and will be fully carried through the initial phase of exploration The Ombu Contract, in which Emerald has a 100% working interest, covers an areaof 300 sq. km located in the Caguan Basin, to the south-west of the LlanosBasin, in Colombia. The initial phase of the exploration period is 11 months,commencing 15 December 2006, and the minimum work programme comprises theacquisition of 61 km of new 2D seismic data and the re-processing of 60 km ofexisting 2D seismic data. Emerald is evaluating a possible re-entry of anexisting well in the block that tested hydrocarbons. A 58 sq. km 3D seismic survey has been completed across the Gigante fieldstructure and the seismic data is now being processed. The results from theprocessing will be used to refine the structural interpretation and evaluate thepotential for further development of the Gigante field, including the drillingof the Gigante No.2 well. The 3D seismic survey, covering the Gigante structure,will also be used to optimise the location of any future development wells. The Saxon Rig 223, under contract to Emerald until January 2008 commenceddrilling Emerald's Aureliano No.1 exploration well on the Fortuna block in midDecember. The Aureliano prospect lies adjacent to the Totumal oil field whichproduced more than 0.8 mmbbl of oil from La Luna, a Cretaceous limestoneformation, until late 1980s, when it was shut-in by Ecopetrol. The AurelianoNo.1 well was drilled to its total depth of 8,745 ft in January 2007. The wellis currently being flow tested to determine the potential of the Aurelianostructure as a commercial development. The initial testing is expected to becompleted before the end of the first quarter 2007. The Saxon Rig 223 is now on loan to another operator and is expected to bereturned to Emerald in the Llanos basin in the second quarter of the year toproceed with Emerald's exploration and development drilling schedule whichincludes the drilling of Campo Rico No. 4 well in the Campo Rico field. Underthe commerciality status granted by Ecopetrol for the Campo Rico fielddevelopment, the drilling costs for this development well, are shared withEcopetrol on a 50/50 basis. The Las Acacias No.1 well, drilled in the first half of 2006 to the south of theVigia field in the Campo Rico block, has been configured as a permanent disposalwell for the produced water from the Vigia field and a pipeline installedbetween the Vigia field and the well, thus reducing the ongoing cost oftransporting and disposal of the water. The Centauro South field which was discovered in the second quarter of 2006 ison production from two wells. A flow line is being installed between this fieldand the Campo Rico field production facilities so that the fluids may begathered and processed cost-effectively using the existing facilities. Colombia - Production Daily gross production for the second six months of 2006 averaged 3,663 bopd,compared to 3,677 bopd achieved in the first half of 2006. Production in thesecond half of 2006 was affected by the failure of an electric submersible pump("ESP") in the Gigante No.1A well and the subsequent two week period whenproduction was shut-in while a suitable rig was sourced for the workover. A newESP, incorporating design modifications, has now been installed in the well andproduction restored. Emerald currently has ten production wells with nine on production currentlylifting approximately 3,600 barrels of oil per day. The Campo Rico field hasthree wells on production at an aggregate rate of about 1,300 bopd. The Vigiafield has three wells on production at a combined rate of about 550 bopd. TheCentauro Sur field has two wells on production at a combined rate of about 700bopd. The Gigante field is producing approximately 1,050 bopd from the GiganteNo.1A well. Silfide No.1 remains shut-in. The Gigante and the Campo Rico fields are operated as joint operations withEcopetrol with both production and costs shared between the parties inaccordance with the relevant association contracts. Applications to Ecopetrolfor commerciality status of the Vigia, Silfide and Centauro Sur fields are beingprogressed by Emerald. Syria, Block 26 - Exploration The Tigris No. 1 well, testing the Tigris prospect located beneath the largeSouedieh field, was spud in September 2006. The well is currently drillingthrough the Palaeozoic geologic section and has a planned total depth ofapproximately 4,500 metres. Tigris No.1 is the second of four commitment wells to be drilled during theinitial exploration phase of the contract for Block 26 that ends in August 2007. A programme of 266 kilometres of 2D seismic has been successfully completed inBlock 26. The data has been processed and is now being interpreted. The newseismic data will be integrated into the existing geological model of Block 26to optimise the remaining work programme in this phase of exploration. Outlook In Colombia the Company is evaluating the Aureliano structure and if determinedto be commercial will source a local drilling rig to commence an appraisal anddevelopment drilling programme. The Saxon Rig 223 will return to Emerald'sLlanos operations in the second quarter of 2007 and will resume drilling in theCampo Rico Block. The seismic acquired over the Gigante structure whenprocessed, will be used to finalise the drilling plans for the Gigante No2development well. The Company continues to identify prospective acreage in Colombia to be exploredunder additional exploration contracts issued by the ANH. In Syria the Company is committed to drilling at least two more explorationwells before August 2007 when the initial exploration phase for Block 26 ends.The acquisition of 266 km of 2D seismic and additional geological work hasgreatly enhanced the understanding of the blocks prospectivity and the selectionof the next two drillable prospects will be made shortly. Emerald continues to review growth opportunities, including in othergeographical areas, as new licences, farm-ins and acquisitions. Angus MacAskill, Emerald's Chief Executive Officer, said: "We have seen considerable progress in the Company's exploration strategy fordelivering cost-effective growth with the addition of three new contract areasin two new basins in Colombia, and the commencement of drilling to testprospects in both Colombia and Syria. 2007 will be an exciting year for Emerald starting with the results of Tigrisand Aureliano exploration wells expected in the first quarter, developmentactivities in Campo Rico and Gigante in Colombia, two further exploration wellsin Syria and the advancing of exploration activity in Colombia." Company web site may be found at www.emeraldenergy.com Enquiries: Helen Manning 020 7925 2440 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Emerald Energy