LONDON (Alliance News) - Amerisur Resources PLC Friday said initial analysis of the Jaguarete-1 well in Paraguay has demonstrated the presence of oil within the basin but said the accumulations that have been found are "unlikely to be commercially extractable."
Amerisur said the electrical logs obtained in the exploration well indicates the presence of oil saturations within low porosity sandstones of the Lima and Santa Elena formations, stating it believes it may be the "first demonstration" of oil within the Paraguayan Parana basin.
"I am pleased to report the presence of a petroleum system in the Jaguarete-1 exploration well, which validates the conclusions of the analysis and exploration work we have performed at low cost over the last years," said John Wardle, chief executive of the company.
"The reservoir quality indicates that the accumulations at this particular point in the structure and block are unlikely to be commercially extractable at the current time," said Amerisur.
The company found a total of 198.0 feet of net sand in the Lima sandstone, of which 126.0 feet demonstrated oil saturation exceeding 50% but with an average porosity of only 7.0%. In Santa Elena, with 168.0 feet of net sand, oil saturations averaged 61% and the majority of sands demonstrated over 75% of oil saturation, but again with similar porosity to Lima.
"The company has now begun a technical programme, presented to and approved by the relevant authorities in Paraguay, to study the results of the well in order to determine whether the poor reservoir quality observed is likely to be a regional characteristic or more locally associated with the basement uplift observed in drilling," said the company.
The well has now been suspended with seven-inch liner cemented in place, and the drilling rig QG-1 has been released, and will be rigged down and stored on the Jaguarete location.
"The challenge now is to define the geology encountered in order to further understand the characteristics of the reservoirs, since a higher quality of rock is usually required in order to produce economically," said Wardle.
"While those studies are underway, which may take up to 18 months to complete, the company will restrict investment in Paraguay and concentrate on operations within our core area of Colombia," he added.
Amerisur said it would "entertain" farm-out discussions with parties that are interested in taking part in the project.
At the Platanillo project in Colombia, Amerisur said it has completed the seismic inversion processing and has confirmed a "strong development" of the N sand within the Platanillo contract area.
The company is currently designing an appraisal and development plan for that reservoir, already proven and tested in two Platanillo wells, it said. Additionally, further understanding of the U and T sand horizons has been achieved from the data, which offers additional future drilling and reserves potential.
Spudding of Platanillo-8, the first of a minimum of two infill wells is expected by June 22, and will take approximately 30 days to complete and test.
Amerisur said unseasonable rainfall continues to impact the progress of completing the company's all important OBA pipeline system which is connecting the field to facilities in neighbouring Ecuador, but said work is continuing on all fronts and said the system should be completed shortly.
In a separate statement on Friday, Amerisur said it has signed the amended farm-out agreement with Canacol Energy Ltd of Canada covering the Coati contract area in Colombia. The amended deal will see Canacol earn a working interest of 40% rather than the original 20%.
The consideration for the deal will see Canacol carry USD10.8 million worth of costs, of which USD7.0 million is outstanding in favour of Platino Energy, the operator of the area which Amerisur acquired in January.
"This carry will fund investments associated with exploration phase III within the Coati block, and may be allocated towards seismic and drilling operations. Subsequent to the carry being satisfied, costs will be shared 60% Platino, 40% Canacol," said the company.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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