Pensana Regulatory News (PRE)

14 May 2008 07:00

Commencement of 2D Seismic Programme on Antorcha Block, Colombia

Highlights:

- A 60km seismic programme has commenced on Pan Andean's 100% owned Antorcha block in Colombia

- Approaches received to partner the block

Pan Andean (AIM:PRE), the AIM-listed oil & gas producer, is pleased to announce the start of seismic survey in the 100% owned Antorcha Block, located in the prolific Middle Magdalena Basin of Colombia. The block licence was signed in November 2007, after which Pan Andean accelerated an exploration programme to confirm the block's prospectivity, with the objective of drilling by the end of 2008.

Regional studies and surface geological work are complete.  Pan Andean is finalising seismic reprocessing of 7 existing seismic lines. Adjacent well data has also been interpreted.

A new 2D seismic survey campaign started in May 2008 and will cover c.60km and take approximately 2 months to complete. Once completed, Pan Andean expects to identify the optimal locations for drilling by July 2008. 

Antorcha neighbours an existing conventional oil producing area, operated by the state petroleum company Ecopetrol.

The Antorcha block is located up dip of existing oil producing fields, the Velasquez-Palagua field with more than 300 million barrels of oil reserves and the Teca-Cocorna-Nare-Jazmin heavy oil field with more than 1,000 million barrels of oil in place. Preliminary studies suggest significant undiscovered heavy oil potential at shallow depths of less than 2,000 feet.

Between 1 and 2 billion barrels of oil in place could exist on the block with 100 to 300 million barrels of recoverable reserves, using parameters of nearby fields i.e. porosity 20 - 25%, oil saturation 60%, average net oil thickness of 100 - 200 feet, recovery factor of 10 - 15%. Expected crude quality could be in the range of 10° to 20° API.

Subject to confirmation of drillable targets and well rig availability, a drilling programme will be undertaken by end 2008.

David Horgan, Managing Director of Pan Andean Resources, commented: 

"This is a key step in Pan Andean's development.  We are shooting a focused seismic programme to optimise early drilling and the Company has already been approached by major oil players interested in funding an early drilling campaign on this block.

We have long been impressed at the excellent fiscal terms available in Colombia, excellent security in the Antorcha region and no community or environmental issues in what is a long established hydrocarbon producing area. Higher oil prices have transformed the economics of unconventional oil, yet this sector is only now being developed - though targeted Colombian plays contain much lighter oil than that in Venezuela's Maracaibo Basin. Applying techniques perfected in neighbouring Venezuela, Pan Andean identified Antorcha as an attractive substantial play which can be proven with shallow drilling.

The geological model is simple; targeting a shallow reservoir up-dip of existing fields, with extensive seepages. We look forward to hopefully commencing our drilling programme on this play by the end of 2008."

This announcement has been approved by Ivan Sandrea, Director, Pan Andean. Mr Sandrea has more than 10 years of international E&P experience.

Contacts:

www.panandeanresources.com