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14 Jul 2008 07:16
Emerald Energy Plc
14 July 2008
Colombia - Operations Update
Emerald Energy Plc ("Emerald" or the "Company") would like to provide the following update on operations in Colombia.
Ombu Farmout
The Company has entered into a farmout agreement with Canacol Energy Inc. "Canacol" under which Canacol will earn a 10% interest in the Ombu block by paying 100% of the cost of drilling and testing the Capella No.1 exploration well. Under the terms of the agreement, Canacol may earn an additional 5% interest in the block by paying 100% of the cost of two further wells plus the cost of a 2D seismic survey over the prospect. Canacol may earn a further 15% interest in the block by paying 100% of the cost of drilling twelve further wells together with the cost of a 3D seismic survey over the prospect.
In total, Canacol may earn up to a 30% interest in the Ombu block by paying 100% of the cost of up to 15 wells plus 2D and 3D seismic surveys.
This agreement is subject to a number of conditions, including the approval of the ANH, the National Hydrocarbon Agency of Colombia, of any of the assignments contemplated by this agreement.
Capella No.1 Well
The mobilisation of a rig to the Capella No1 well location in the Ombu block commenced in June and drilling of the well has now started. The well is planned to reach a total depth of approximately 4,000 feet and take approximately one month to drill and evaluate, followed, on positive drilling results, by a period of up to six months to test a number of methods of production including natural flow, artificial lift and, if considered beneficial, cyclic steam injection.
The Company estimates the structure may contain over 30 million barrels of unrisked recoverable resources of heavier oil in the range of 11 to 14 degrees API gravity.
Vigia No.6 Well
Drilling of the Vigia No.6 development well in the Vigia field, has commenced. This well is designed as an oil producer targeting the Cretaceous Une and Gacheta reservoirs. It is expected to take approximately one month to drill and evaluate and will then be completed and connected to the production facilities in the Vigia field.
Emeralds' Chief Executive Officer, Angus MacAskill, said:
"We are delighted to be drilling a well on the Capella prospect which has the potential to add material reserves to our Colombian portfolio and a further development well on Vigia which we expect to add to production in the near future. We are also pleased to welcome Canacol, with their experience in heavy oil recovery projects, as a partner to this project."
Enquiries: Lisa Hibberd 020 7925 2440
Background Information
Canacol Energy Inc is a private Canadian company with interests in Latin America. Canacol is currently in the process of being acquired by BrazAlta Resources Corp, a Canadian listed company with upstream exploration and production interests, and drilling services in Brazil. The combined company, to be called Canacol Energy Inc, will have a regional presence in South America with a portfolio of production, appraisal and exploration assets in this focus region.
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