26th Jan 2009 07:00
Emerald Energy Plc
26 January 2009
Emerald Energy Plc ("Emerald" or the "Company") is pleased to provide the following update for its activities:
HIGHLIGHTS
Appraisal of discovery at Yousefieh underway.
Appraisal of Capella heavy oil discovery underway with 4 wells, in total, drilled.
Gigante No.2, designed to develop the Tetuan reservoir and explore the deeper Caballos formation, is drilling ahead at approximately 6,200 feet with a target total depth of 16,000 feet.
Khurbet East field production averaged more than 10,000 bopd (gross) in Q4 2008.
Colombia average production over 4,300 bopd (gross) during Q4 2008, after development drilling.
Production (quarterly average net entitlement) of over 6,000 bopd in Q4 2008.
Cash balance of over $70 million (unaudited) at end of 2008.
Active forward exploration and development programme funded from existing cash and cash flow.
Syria
The Khurbet East No.7 delineation well, drilled in the north end of the field indicates that the oil-water contact may be slightly deeper than interpreted from previous information. The well has been suspended and may be used later as a water disposal well. A revision to the Khurbet East reserves study for the Massive reservoir completed in January 2008 is being undertaken utilising this and other data including data acquired during early production.
The Yousefieh No.1 discovery well identified a 63 metre net oil pay column, the upper 19 metres of which produced 900 bopd under natural flow during a production test. Yousefieh No.2, the first appraisal of the discovery has been spud and is designed to test the limits of the hydrocarbon accumulation. Yousefieh No.1 identified a new geological play type in the area and the acquisition of a 640 square kilometre 3D seismic survey has commenced with the aim of exploring this play further.
Gross oil production to the end of 2008 totalled over 1.4 million barrels since the start of production from the Khurbet East field in July 2008. During December 2008, gross oil production averaged 9,432 barrels per day, reduced by the execution of a previously planned reservoir and pressure monitoring programme during the month.
Colombia
Development activity continues with 2 wells having commenced drilling in the second half of December. The Campo Rico No.5 well is expected to be completed in February 2009. The Gigante No.2 development well is expected to recover approximately 4 million barrels of existing reserves from the Tetuan reservoir. Initial production rate for the Gigante No.2 well is expected to be similar to the rate of 3,000 barrels of oil per day experienced in the early production from the Gigante No.1A well. In addition, the well will evaluate the resource potential of the Caballos formation, which the Company estimates may contain 15 million barrels of unrisked recoverable resources, some 120 feet below the Tetuan. Gigante No.2 is expected to be completed around the middle of 2009.
Drilling operations have continued in the Ombu block. Capella No.3, the first deviated well to be drilled in the block, has a surface location adjacent to the Capella No.1 vertical well and penetrates the reservoir approximately 340 metres away. The Capella No.4 vertical well was drilled approximately 1.6 kilometres to the southwest of the Capella No.1 location. The Capella No.3 and Capella No.4 wells both encountered the target Cretaceous Mirador reservoirs with net hydrocarbon intervals similar to those encountered in the previous wells. Production testing of these wells has not been completed. The rig has now commenced drilling the Capella No.5 well, located some 3.4 kilometres to the northeast of Capella No.1.
Under the amended terms of the farm-out agreement announced on 10 November 2008, the cost of drilling and production testing the Capella No.1 well was paid by Canacol Energy Inc. to earn a 10% interest in the Ombu block; the assignment of the 10% interest is subject to the approval of the ANH.
Due to a number of events, compounded by inclement weather, the exploration wells in the Maranta and Jacaranda blocks have been delayed. The Mirto No.1 well in the Maranta block and the Jacinto No.1 well in the Jacaranda block are both now expected to commence drilling in the first quarter of 2009. The Company estimates that the Mirto prospect may contain unrisked prospective resource of between 5 and 15 million barrels, and the Jacinto prospect may contain unrisked prospective resources of over 10 million barrels.
Gross oil production totalled approximately 1.3 million barrels during 2008 with an average of 4,960 barrels per day for December 2008. Production in the fourth quarter of 2008 increased as a result of the successful development drilling campaign in the Vigia field.
Peru
Emerald was the successful bidder on Block 163 in the 2008 bidding round. On completion of the award process, Emerald will hold 100% working interest and operatorship of Block 163, Emerald's first exploration block in Peru.
Block 163 is located in the Ucayali basin, approximately 440 kilometres to the northeast of Peru´s capital, Lima, and has an area of approximately 5,000 square kilometres. The work commitment during the first phase of the exploration and production contract, lasting twelve months, consists of technical studies.
Production
During the period to 31 December 2008 the Company benefited from production in Colombia and Syria as shown below.
|
Q4-2008 |
Q3-2008 |
Q2-2008 |
Q1-2008 |
FY 2008 |
FY 2007 |
|
|
bopd |
bopd |
bopd |
bopd |
bopd |
bopd |
|
|
Gross production: |
||||||
|
Colombia |
4,355 |
3,953 |
2,823 |
2,979 |
3,531 |
3,456 |
|
Syria |
10,062 |
5,312 |
- |
- |
3,864 |
- |
|
Working interest production: |
||||||
|
Colombia |
3,394 |
2,902 |
1,792 |
1,799 |
2,475 |
2,274 |
|
Syria |
5,031 |
2,656 |
- |
- |
1,932 |
- |
|
8,425 |
5,558 |
1,792 |
1,799 |
4,407 |
2,274 |
|
|
Net entitlement production: |
||||||
|
Colombia |
3,087 |
2,644 |
1,619 |
1,622 |
2,246 |
2,038 |
|
Syria |
2,961 |
1,569 |
- |
- |
1,139 |
- |
|
6,048 |
4,213 |
1,619 |
1,622 |
3,358 |
2,038 |
Outlook
Development drilling is taking place in the Campo Rico and Gigante fields in Colombia and is planned for the Khurbet East field in Syria. Appraisal activities are taking place on the Capella discovery in Colombia with the drilling of up to a further 3 wells and the long term testing of all 7 wells planned for 2009. Appraisal drilling on the Yousefieh discovery in Syria is underway and at least 1 further appraisal well is expected to be completed in 2009. Exploration wells are planned to commence drilling in the first quarter of 2009 in the Maranta and Jacaranda blocks in Colombia. The capital budget for 2009 totals approximately $85 million, with all of the activity planned to be funded from existing cash and cash generated from production.
Emerald's Chief Executive Officer, Angus MacAskill, said:
"We are very pleased with the progress made by the Company in 2008, reflected in the increased level of production at the year end and the participation in two material discoveries at Capella and Yousefieh. We look forward to an exciting year ahead with material development, appraisal and exploration activity in Syria and Colombia."
Enquiries: Lisa Hibberd 020 7925 2440
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