Gran Tierra Energy Announces Increased Working Interest and Contingent Resource Estimate for Block 95, Peru
Operations Update, With New 3-D Seismic Data Increasing Moqueta Structural Closure Area
CALGARY, June 11, 2012 /PRNewswire/ - Gran Tierra Energy Inc. ("Gran Tierra Energy") (NYSE MKT: GTE, TSX: GTE), a company focused on oil exploration and production in South America, today provided updates for its operations in Colombia, Argentina and Peru.
Block 95, Marañon Basin (Gran Tierra Energy 100% WI and operator subject to PeruPetro S.A. and Peruvian Government approvals)
Gran Tierra Energy Peru S.R.L. has entered into an agreement to purchase the remaining 40% working interest in Block 95 from Global Energy Development PLC. Subject to PeruPetro S.A. and Peruvian Government approvals, Gran Tierra Energy will have a 100% working interest in Block 95.
In addition, Gran Tierra Energy announces the results of a contingent gross lease resource estimate for an oil discovery on Block 95, provided by its independent reserves auditor, GLJ Petroleum Consultants ("GLJ") effective June 1, 2012. The resource estimate has been prepared in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook.
- Low estimate "1C" contingent resources of 11.5 million stock tank barrels of oil ("MMSTB")
- Best estimate "2C" contingent resources of 31.6 MMSTB
- High estimate "3C" contingent resources of 88.1 MMSTB
There is no certainty that it will be commercially viable to produce any portion of the resources. Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status. The recoverable resources attributed to the Block 95 discovery were considered sub-commercial (contingent resources) due to the absence of a commitment to proceed with development and the fact that development is in the very early stages as considered from the point of view of both regulatory requirements, and development strategy. It is premature to determine the economic status; the economic status is undetermined until additional fluid samples confirm the market for the crude and Gran Tierra Energy has done additional work on the oil market, development capital and environmental/regulatory matters.
The oil field discovered on Block 95, with the Bretaña 10-16-1X discovery well drilled in 1974, flowed 807 barrels of oil per day naturally without pumps for approximately six hours from the Vivian Formation. Well records indicate inconsistent oil gravity values of 13.1° API and 17.6° API. As the Bretaña well is located in a remote location, an oil gravity of 13.1° API will make this project challenging to develop in the current economic environment. If the oil gravity is 17.6° API, this project will likely be economic to develop in the current economic environment. Gran Tierra Energy is planning to drill a new exploration well in the fourth quarter of this year to further delineate this field and to explore deeper reservoir horizons not penetrated by the discovery well. A drilling site location has been identified and civil construction initiated for the Bretaña Norte 95-2-1X exploration well on this structure.
Chaza Block, Putumayo Basin (Gran Tierra Energy 100% WI and operator)
A 3-D seismic program has now been acquired over the Moqueta Field. The new maps over the field indicate the eastern flank of the structure extends more than 2.5 kilometers to the northeast at the level of the lowest known oil in existing well bores in the field, implying additional reserve potential may exist on the east flank of the structure that had not previously been recognized. A new well to evaluate this additional potential is being designed for drilling late this year.
Mobilization for a drilling rig is underway for the Moqueta-7 appraisal well in the Moqueta field, which is expected to be spud in early July. This well is targeting additional appraisal of the down-dip extent of the oil columns encountered in the Villeta U, Villeta T and Caballos reservoirs in the field approximately 960 meters west-southwest of the Moqueta-4 appraisal well. Gran Tierra Energy intends to target the interpreted oil-water contact, which has not yet been encountered by drilling, approximately 225 feet below the lowest known oil in existing well bores in the field; Moqueta-7 could be used as an oil producer or water injector for pressure support depending on the well results.
The Costayaco-16 development well spud on June 6, 2012; this well is intended to be a producing well to assist with maintaining plateau production in the Costayaco Field.
Azar Block, Putumayo Basin (Gran Tierra Energy 40% WI and Operator, Lewis Energy Colombia Inc. 40% WI, Gold Oil 20% WI subject to Agencia Nacional de Hidrocarburos approval)
The La Vega Este-1 oil exploration well spud on May 14, 2012 and is targeting the same Cretaceous sandstone intervals present in the Costayaco and Moqueta discoveries. Gran Tierra Energy expects the La Vega Este well to reach total depth at the end of June, with results expected in July.
Garibay Block, Llanos Basin (Gran Tierra Energy 50% WI, CEPSA 50% WI and operator)
The Bordon-1 oil exploration well spud on June 6, 2012 and is expected to reach total depth in late July, with results expected in August.
Puesto Guevara Block, Neuquen Basin (Gran Tierra Energy 100% WI and operator)
The Los Incas x-1 oil exploration well in the Puesto Guevara Block has been drilled and is being plugged and abandoned after encountering only minor oil shows.
May production and sales have been impacted by additional disruptions on the Ecopetrol-operated Oleoducto Transandino ("OTA") pipeline in Colombia. Gran Tierra Energy continued production at a reduced rate while the OTA pipeline was down, selling a portion of its crude through trucking and storing excess crude. Production, net after royalties and before changes in inventory and losses for the months of April and May averaged approximately 18,000 barrels of oil equivalent per day. Production is expected to return to normal levels mid-June.
About Gran Tierra Energy Inc.
Gran Tierra Energy is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE MKT (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra Energy holds interests in producing and prospective properties in Colombia, Argentina, Peru, and Brazil. Gran Tierra Energy has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth.
Gran Tierra Energy's Securities and Exchange Commission filings are available on a web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
Forward Looking Statements and Advisories
This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 - Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995. The use of the words "expected", "intends", "will", "targeting", "planning", "could", "estimate", "potential", "scheduled", and derivations thereof and similar terms identify forward-looking statements. In particular, but without limiting the foregoing, this news release contains forward-looking statements regarding Gran Tierra Energy's intended and expected drilling operations in Colombia, Argentina and Peru including, without limitation, anticipated well uses, drilling targets and timelines, estimated additional reserves and resource potential and estimated contingent resources and expectations respecting the resumption of service of the OTA pipeline.
Statements relating to "resources" are forward-looking statements as they involve the implied assessment, based on estimates and assumptions, that the resources described exist in the quantities predicted or estimated and can be profitably produced in the future.
The forward-looking statements contained in this news release reflect several material factors and expectations and assumptions of Gran Tierra Energy including, without limitation: assumptions relating to log evaluations; that Gran Tierra Energy will continue to conduct its operations in a manner consistent with past operations; the accuracy of testing and production results and seismic data; the effects of certain drilling techniques; and the general continuance of current or, where applicable, assumed operational, regulatory and industry conditions. Gran Tierra Energy believes the material factors, expectations and assumptions reflected in the forward-looking statements are reasonable at this time but no assurance can be given that these factors, expectations and assumptions will prove to be correct.
The forward-looking statements contained in this news release are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements, including, among others: unexpected technical difficulties and operational difficulties may occur, or the obtaining of environmental permits may be delayed, which could impact or delay the commencement of drilling; geographic, political and weather conditions can interrupt drilling, which could impact or delay the commencement or continuation of drilling, service of the OTA pipeline may not resume on the timeline or to the capacity currently expected by Gran Tierra Energy; and the risk that current global economic and credit market conditions may impact oil prices and oil consumption more than Gran Tierra Energy currently predicts, which could cause Gran Tierra Energy to change its current drilling, production and testing plans. Although Gran Tierra Energy's plans for its ongoing exploration and development and the funding thereof are based upon the current expectations of the management of Gran Tierra Energy, there may be circumstances where, for unforeseen reasons, a change in such plans may be necessary as may be determined at the discretion of Gran Tierra Energy. Should any one of a number of issues arise, Gran Tierra Energy may find it necessary to alter its current business strategy. Further information on potential factors that could affect Gran Tierra Energy are included in risks detailed from time to time in Gran Tierra Energy's Securities and Exchange Commission filings, including, without limitation, under the caption "Risk Factors" in Gran Tierra Energy's Quarterly Report on Form 10-Q filed May 7, 2012. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov and on SEDAR at www.sedar.com. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and Gran Tierra Energy disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation.
Barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a BOE conversion ratio of 6 Mcf: 1 bbl would be misleading as an indication of value.
SOURCE Gran Tierra Energy Inc.