17th Sep 2009 07:00
Emerald Energy Plc
17 September 2009
Colombia - Colombia Operations Update
Emerald Energy Plc ("Emerald" or the "Company") is pleased to provide the following update on operations in Colombia.
Mirto No.1 Exploration Well
Flow testing operations have been completed in the Cretaceous aged Villeta N sand in the Mirto No.1 well, the shallowest of four sands flow tested in this well. The 7 feet interval at 10,410 feet produced 15 degrees API oil at an average rate of 247 barrels per day over a 48 hour period, under artificial lift using a jet pump and through a 128/64 inch choke, with an average water cut of 64%.
Following the completion of operations in the Mirto No.1 well, the drilling rig will be demobilised from the location. Based upon the preliminary evaluation of the results of Mirto No.1, the Company plans to elect to enter the next phase of the contract with a minimum work commitment of 1 well.
Gigante No.2 Well
Following the previously reported flow testing operations in the Caballos formation using an electrical submersible pump, the drilling rig was demobilised from the well and was replaced by a smaller and lower cost workover rig for the remainder of the evaluation and testing operations.
Based on the Company's evaluation of the results to date in the Caballos formation, Emerald has informed Ecopetrol of the discovery and has requested commerciality. Ecopetrol may, under the terms of the Association Contract, participate with a 50 per cent interest in the development of the Caballos formation and reimburse Emerald 50 per cent of the cost of the exploration.
The Company's preliminary evaluation of the wire-line logging and flow testing operations conducted to date indicated that the production capability of the Caballos formation may be significantly enhanced by conducting a hydraulic fracturing operation. The design of this operation has been completed, the equipment required has been mobilised to the well-site and the hydraulic fracturing operation is currently being conducted.
Following the hydraulic fracturing operation, the Caballos formation will be flow tested. This flow testing is planned to include an extended production and shut-in period to assist in determining the extent of the Caballos reservoir. The Company expects that operations on the Caballos formation may take up to one month to complete.
Upon evaluation of the results from the flow testing, the Company and its partner, Ecopetrol, plan to commence evaluation and flow testing operations in the overlying Tetuan formation, which may include the application of hydraulic fracturing, or may complete the well as a producer from the Caballos formation.
Capella No.SH1 Slim-Hole Well
Capella No.SH1, the first of two slim-wells planned to be drilled in the Capella field, was drilled to a depth of 2,903 feet before encountering mechanical drilling problems which resulted in this wellbore being abandoned. Based on an evaluation of the operations, the drilling rig has been changed and some equipment modified to enable the rig to drill to the target depth and drilling operations have commenced on a replacement well, Capella No.SH1X, in the same location. The well is planned to take approximately one month to drill and evaluate.
Production
Gross oil production averaged 4,196 barrels per day during the month of August, with the Capella heavy oil field contributing 243 barrels per day to this total.
Emerald's Chief Executive Officer, Angus MacAskill, said:
"We are very pleased with the results achieved in the Colombia asset portfolio, with oil produced from a second horizon in the Mirto No.1 exploration well, the identification and commencement of an opportunity to enhance the production capability of the recently discovered Caballos oil reservoir in the Gigante No.2 well, and steady production from the producing fields. We look forward to the results of the evaluation and flow testing operations in the Gigante No.2 well and slim-hole drilling in the Capella field."
Enquiries: Lisa Hibberd 020 7925 2440
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the City Code on Takeovers and Mergers (the "Code"), if any person is, or becomes, 'interested' (directly or indirectly) in 1% or more of any class of 'relevant securities' of the Company, all 'dealings' in any 'relevant securities' of the Company (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by no later than 3.30pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which any offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the 'offer period' otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an 'interest' in 'relevant securities' of the Company, they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant securities' of the Company by any offeror or the offeree company, or by any of their respective 'associates', must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's (the "Panel") website at www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a 'dealing' under Rule 8 you should consult the Panel.
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