14th Feb 2008 07:01
Emerald Energy PLC14 February 2008 Emerald Energy Plc 14 February 2008 Colombia: Operations Review and Update Emerald Energy Plc ("Emerald" or the "Company") is pleased to provide thefollowing update on its Colombian operations for the period ending 31 December2007 and its plans for 2008: Operations Review Daily gross production for the second half of 2007 averaged 3,255 bopd, fromfields in Colombia, compared to 3,661 bopd achieved in the first half of 2007.During the full year 2007, daily gross production averaged 3,456 bopd comparedto 3,673 bopd in 2006. Production in the second half of 2007 was reduced due to the electricalsubmersible pump ("ESP") in the Gigante No.1A well needing replacement on twooccasions. The well, normally averaging 950 bopd, did not contribute toproduction for a period of 7 weeks while a workover rig was mobilised andoperations conducted. The ESP required replacement again in February 2008;during this operation the new ESP was sourced from a different supplier and thewell has been returned to production. Following the successful re-entry of the Totumal No.4 well in the FortunaAssociation Contract, the Totumal No.1 well was re-entered in November 2007, amechanical pump installed, and production commenced at an initial rate ofapproximately 40 barrels of oil per day. This is the second well to bere-activated in the Totumal field and the information gained from productionfrom these wells will assist in evaluating the future production potential ofboth the Totumal and Aureliano fields. In December 2007, Ecopetrol elected not to exercise its 20% back-in right in theSilfide field in the Fortuna Association Contract and Emerald has the right toexploit the field under sole-risk field status. The Company is currently indiscussions with potential partners for further operations on the field. The Company acquired 71 kilometres of 2D seismic data in the Maranta block and55 kilometres of 2D seismic data in the Jacaranda block. Interpretation of thenew seismic data supports the planned drilling activity in 2008 In the Ombu block, Emerald agreed with the National Hydrocarbon Agency ofColombia ("ANH") to substitute the drilling of an exploration well for theexisting 2D seismic obligation and to extend the current period of the contractby 6 months to provide sufficient time for this well to be drilled. 52 kilometres of 2D seismic data were acquired In the Helen block. A small,sub-commercial, single prospect was identified from the interpretation of thenew seismic data, and Emerald has subsequently relinquished the acreage. 2008 Forward Plans The Company plans a capital budget of up to $46 million in Colombia in 2008which includes the drilling of three exploration wells. The first of these will be drilled on the Capella prospect in the Ombu blockwhich Emerald estimates may contain over 30 million barrels of unriskedrecoverable resources. The well is planned to be drilled in first half of 2008,followed by a period of testing of up to six months to evaluate variousproduction methods, including steam injection for thermal recovery. Further exploration wells are expected in the second half of 2008 in the Marantaand Jacaranda licences on prospects that the Company estimates may containunrisked recoverable resources in the range of 5 to 15 million barrels forMaranta and over 10 million barrels for Jacaranda. Two development wells are planned in the Campo Rico and Vigia fields. Ecopetrolwill participate at their 50% working interest level in the Campo Rico No.5well. The Vigia No.5 well will be drilled by Emerald at its sole risk asEcopetrol elected in July 2007 not to exercise its 50% back-in right to theVigia field. The Campo Rico and Vigia wells are planned to commence drilling inthe second quarter of 2008. Emerald has completed its technical and economic studies for the proposedGigante No.2 well to develop the existing reserves in the producing Tetuanformation and test the exploration potential of the underlying Caballosformation. The Company estimates that the proposed well may recover, in themid-case, approximately 4 million barrels of oil from the Tetuan formation. Theprospective resources of the Caballos formation are in the range of 10 to 20million barrels. The Company is currently in discussions with potential partnersto share the cost of drilling Gigante No.2 well which is anticipated to spud inlate 2008 or early 2009. The work programme for 2008, conditional on prior exploration drilling resultsand governmental approvals, includes the acquisition of seismic data and thedrilling of two further exploration and/or appraisal wells. General The Company expects that under its own forecasts of world oil price levels andproduction volumes from existing fields in Colombia, all of its plannedoperations during 2008, including a share of up to 50% of the Gigante No.2drilling costs, will be funded from existing financial resources and cash flowfrom operations without recourse to the capital markets. Angus MacAskill, Emerald's Chief Executive Officer, said: "Having secured new exploration assets for our Colombian portfolio during 2007under the favourable ANH contracting terms, we have now acquired and interpretedthe data to move forward with a very active drilling programme in Colombia withthe potential to materially enhance the resource base of the Company." Company web site may be found at www.emeraldenergy.com Enquiries: Lisa Hibberd 020 7925 2440 Notes : Ombu block Emerald has a 100% working interest in this block, located in the Caguan Basin.A previous exploration well was drilled on the Capella prospect in 1975,encountering and recovering a total of 213 barrels of oil in the range 11 to 14API from a number of horizons over a 110 feet section. Maranta block Emerald has a 100% working interest in this block, located in the Putumayobasin. The block is adjacent to blocks in which Gran Tierra Inc. and SolanaResources Limited announced two discoveries in 2007. A number of materialprospects and leads were identified on the existing seismic and new 2D seismicdata was acquired to mature these to a drill-ready status. The initial phase ofthe exploration period under the Maranta contract expires in March 2008 whenEmerald has the right to enter the second phase of one year duration with aminimum work programme including one well. Jacaranda block Emerald has 100% working interest in the block, located in the Llanos basin. Asingle lead had been identified using the existing 2D seismic; the additional 2Dseismic has been positioned to confirm the presence and size of the prospect.The initial phase of the exploration period expires in March 2008 when Emeraldhas the right to enter the second phase of one year duration with a minimum workprogramme including one well. Helen block Emerald's costs during the initial phase of the exploration period, whichexpired in January 2008, were carried by Vetra Energy Group LLC ("Vetra"). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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