28th Mar 2006 07:02
Global Energy Development PLC28 March 2006 Immediate Release 28 March 2006 GLOBAL ENERGY DEVELOPMENT PLC RESERVE REPORT AND OPERATIONS UPDATE Global Energy Development PLC ("Global" or the "Company"), the Latin Americafocused petroleum exploration and production company (LSE-AIM: "GED"), ispleased to announce details from the reserve report prepared on the Company byits independent engineers Ryder Scott Company, LP ("Ryder Scott") as at 31December 2005 and provide an operations update. Reserve Report In line with the newly published Guidance Note for Mining, Oil and Gas companieslisted on the AIM Market of the London Stock Exchange, Global is providingfurther details of its recently completed Competent Persons Report prepared bythe independent petroleum engineers Ryder Scott. Ryder Scott reported that as at31 December 2005, proved plus probable reserves ("2P reserves") net to Globaltotalled 17.5 million barrels of oil and proved plus probable plus possiblereserves ("3P reserves") net to Global totalled 67.5 million barrels of oil.Based upon an approximate Brent Price of $58 per barrel, this being the closingprice as at 31 December 2005, Future Net Revenues ("FNR") for the 2P reservesnet to Global totalled $621 million and FNR for the 3P reserves net to Globaltotalled approximately $2.8 billion. Operations Production The Tilodiran 1 and Macarenas 1 wells within the Rio Verde contract in Colombiaboth ceased production during the fourth quarter of 2005 due to casing failuresand neither has contributed to production so far in 2006. These wells were firstdrilled over a decade ago by a previous operator and recompleted by Global,Tilodiran 1 in December 2004 and Macarenas 1 in January 2005. Workovers torestore production on these wells are unlikely to commence until the second halfof 2006 due to a shortage of workover rigs and necessary downhole equipment. Completion operations are underway on the new exploratory well, Tilodiran 2,within the Rio Verde contract. This well was successfully drilled to a finaldepth of 13,350 feet and intercepted six potentially oil productive zones.Global is currently testing the Upper Massive Ubaque reservoir, which is thefirst of several production tests on this well. A current natural flow rate fromthis single zone was approximately 1,125 bopd plus gas. A full scale productiontest has yet to be fully completed. Global anticipates announcing resultsperiodically throughout the remainder of the testing process. The Company experienced production outages within the two producing fields ofits Alcaravan contract in Colombia from the beginning of February through toearly March related to temporary surface equipment repairs and downtime. As ofmid March 2006, production levels were returned to normal and as of todayproduction is running at improved levels. Since mid March 2006 production has been positively influenced by the successfulimproved recovery programme underway within the Colombian Bocachico contract.The Company commenced the pilot test phase of a cyclic CO2 injection project inlate 2005 on the premise that the effect of CO2 injection would be to swell theoil in place thereby reducing its density and viscosity, improving overall oilmobility and potentially increasing production and reserve recovery rates.Global successfully injected 311 tons of CO2 into the Torcaz 2 well and thiswell absorbed the CO2 for two weeks and was then opened to production. Theimproved production rate from this well is in-line with the forecasts containedwithin the engineering feasibility study conducted by Ryder Scott prior to theproject's implementation. Since the beginning of the year production from the Colombian Los Hatos andBolivar contracts has been stable and in line with management's expectations. The management's production expectations for the year have been formulated usingthe independent Ryder Scott reserve report dated 31 December 2005 whichforecasts total 2006 production, net to Global, of approximately 500,000 barrelsof oil. Production net to Global on an annualized basis is at this point belowmanagement's expectations for the year. However, due to ongoing activity asdetailed above the management expects the shortfall in production to be made upduring the remainder of the year. Exploration Within the Colombian Caracoli contract, reprocessing of vintage seismic testlines has yielded favourable results and will now allow full scale reprocessingof all existing seismic data. The Company is planning an initial seismic programdesigned to further define the Tasajero anticline located on the west side ofthe Caracoli contract area. It is anticipated that the seismic program beexecuted in the second half of the year and will provide sufficient informationto select a drilling location that will adequately test the Tasajero prospect inthe first half of 2007. A program to delineate the El Miedo field within the Colombian Luna Llenacontract, involving the acquisition of new seismic and the drilling of at leasttwo wells, is currently being designed. It is expected the delineation programdesign will be completed within the first half of the year and logisticaloperations to deliver and supply the necessary equipment to the El Miedo fieldarea will commence early in the second half of the year. Evaluation of geologic features similar to the El Miedo field is now underwaythroughout the Valle Lunar Technical Evaluation Agreement area. Specificfeatures have been identified and further data acquisition and analysis iscurrently being planned. The design of the seismic acquisition program for the Bretana field area withinthe Peruvian Block 95 Area contract has been completed and submitted for thenecessary environmental review process. The Company will soon begin preparing atender to solicit bids from qualified seismic acquisition contractors with anexpectation that seismic will be acquired in the second half of 2006. The Panamanian government is currently reviewing an advanced draft contract forthe Garachine Block Area which will convert the Technical Evaluation Agreementinto a long-term contract. Final completion of the contract is expected withinthe first half of this year. Capital expenditure in 2006 is currently projected to be approximately $23million as per the Ryder Scott reserve report. This figure may be reviseddownwards during the year if delays in scheduling equipment continue.Conversely, it may alter upwards if the results from the Tilodiran 2 well promptthe Company to accelerate the drilling of additional wells on the Rio Verdecontract area in the second half of 2006. Managing Director's Overview Commenting on Global's operations to date in 2006, Stephen Voss, ManagingDirector of Global Energy Development PLC, said: "The independently reported reserves indicate the vast potential of the Companyand scope of the individual exploration projects being developed. The projectsprovide us with a very active drilling programme over the next few years. Although we are frustrated with the mechanical problems and continuing delays inscheduling equipment that have hampered our production growth so far in 2006 weremain hopeful of remedying these problems and confident of building onproduction elsewhere within our portfolio. We are currently testing one of several potentially productive formations withinthe Tilodiran 2 well. Even though a full scale production test has yet to befully completed, the Upper Massive Ubaque is naturally flowing 16 API gravityoil at a rate of approximately 1,125 bopd plus substantial, unmeasured naturalgas. The Company has installed a 48/64ths choke in order to restrict the flowrate to match the available surface processing and storage equipment. We areencouraged by this early result and will test each of the remaining prospectivezones over the next few weeks in order to assess the aggregate production ratepotential of this well. Global is also encouraged by the early production test data obtained from ourC02 improved recovery project located in our Torcaz field. The Torcaz 2 well isresponding in line with previous expectations and additionally, the Torcaz 3well is showing evidence of C02 recovered in association with formation oilindicating more effective reservoir continuity than anticipated of the Mugrosoproducing formation. If this proves to be the case it will provide further basisfor the expansion of our C02 program in the Torcaz field. Global continues to be convinced of the high potential of its portfolio ofcontracts." This announcement has been reviewed by Ryder Scott. For further information: Global Energy Development PLCCatherine Miles, director of Investor Relations +44 (0) 20 7763 7177www.globalenergyplc.com +44 (0) 7909918034 Notes to Editors: Oil and Gas Reserves Proven and probable oil and gas reserves are estimated quantities ofcommercially producible hydrocarbons which the existing geological, geophysicaland engineering data show to be recoverable in future years from knownreservoirs. The proved reserves reported by Ryder Scott conform to thedefinition approved by the Society of Petroleum Engineers ("SPE") and the WorldPetroleum Congress ("WPC"). The probable and possible reserves reported by RyderScott conform to definitions of probable and possible reserves approved by theSPE/WPC using the deterministic methodology. Global Global has been listed on the AIM Market of the London Stock Exchange sinceMarch 2002 (LSE-AIM: "GED"). The Company currently holds approximately 5.2million acres through eight contracts in Colombia and Peru, an exclusiveTechnical Evaluation Agreement ("TEA") in Colombia and a concluded exclusive TEAin Panama. Global's portfolio comprises production, developmental drilling andworkover opportunities and several high-potential exploration projects. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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