LONDON (Alliance News) - Amerisur Resources PLC Wednesday said the all-important pipeline that will stretch across Ecuador and into Colombia remains on track to be completed on time, and said drilling elsewhere is also progressing.
Speaking ahead of the company's annual general meeting later Wednesday, Chief Executive John Wardle said the OBA pipeline is still expected to be completed by the end of this month after Amerisur laid the pipeline underneath the Putumayo River to link the pipeline between the two countries.
The timing of the pipeline is significant as Amerisur shut in production from some of its high cost wells at its sole-producing Platanillo field in Colombia, which can not come back online until the pipeline is active as the project will significantly reduce operating costs.
Once completed, the pipeline should lead to its production rate exiting 2016 at around 7,200 barrels of oil per day in 2016, which would be 62% higher than the average rate produced in 2015.
Amersiur has previously guided that average production in 2016 will be around 5,300 barrels of oil per day, which would represent a 19% lift from 2015 but still way below what was being produced back in 2014.
The company had also previously guided that the introduction of the pipeline will reduce operating costs to just USD15 per barrel from the current USD25.
Away from the pipeline, CEO Wardle said the Jaguarete-1 well that was recently spudded in Paraguay has reached 3,850 feet depth of its 10,000 total depth target. Wardle said drilling is running at a faster-than-expected rate which should allow the well to be completed within the next 40 days and for the results to be published sometime in June.
Wardle also said that the company has agreed with its partner, ONGC Videsh, to re-enter the Loto-1 well on the CPO-5 contract area in Colombia. The well was drilled in 2013 before Amerisur acquired its 30% stake in the block, and although oil was found it was never successfully tested.
Analysis of the log data suggeses there is a 61.0 foot net oil pay zone over two zones which will be tested under the upcoming work. That re-entry will cost USD300,000 net to Amerisur.
Amerisur shares were trading down 13% to 27.00 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.