GTE is picking up the pace
Posted: Fri Nov 11, 2011 3:53 pm
GTE continues to trade well below my Fair Value estimate ($11.75/share), primarily due to Wall Street's fear of anything outside the U.S. (the same reason PMG and TGA trade at deep discounts to Fair Value). GTE has a busy schedule just ahead. The big jump in production will come when Moqueta moves from testing to full development next year. GTE is debt free with a very strong Balance Sheet. It is heavily weighted to oil. - Dan
Comments from their conference call:
Gran Tierra Energy is currently undertaking the busiest period drilling in its history with 4 exploration wells to be drilled in Colombia and Brazil and 7 appraisal and development wells to be drilled in Colombia, Brazil and Argentina.
In Colombia, the Rumiyaco oil exploration well is drilling ahead, and we expect to reach total depth in November. This high-impact well in the Putumayo basin is testing a structural closure identified by 3D seismic data that is positioned in between 2 producing light oil trends.
The Pacayaco-1 sidetrack oil exploration well in the Chaza Block is expected to spud in December and reach total depth before year end. This is a sidetrack to an exploration well drilled early this year that encountered oil shows, but no reservoir. We are now targeting a different location picked after the acquisition and interpretation of a new 3D seismic data earlier this year. The Brillante-2 appraisal well, southeast to appraisal well, began drilling in October and the Brillante gas discovery in the lower Magdalena basin of Colombia. The intent of this well in Brillante southeast 3, which is scheduled to follow in December, is to define adequate reserves to justify the construction of a gas pipeline and commit to long-term gas sales contract. The well is expected to reach total depth of approximately 6,000 feet this month. A new 275-square-kilometer 3D seismic program has been acquired over the field and will be used for future development drilling, planning and potential exploration drilling around the Brillante discovery.
In the Putumayo Basin, we continue to experience success with the Moqueta oil discovery appraisal program. The Moqueta-6 sidetrack was drilled and encountered oil in the Kg sandstone, the U sandstone, the T sandstone, in the Caballos reservoirs. The primary T sandstone in Caballos reservoirs were encountered approximately 250 feet deeper than the equivalent reservoirs in Moqueta-5. The well has been tied into existing infrastructure, and the testing program has been initiated to confirm the nature of the fluids and reservoir productivity of the sandstones with results expected in approximately 1 month. This is being done in concert with ongoing long-term testing to evaluate the reservoirs in the other wells.
Average production from Moqueta field is expected to remain modest this year at approximately 500 barrels of oil per day. Production is expected to begin slowly ramping up in 2012, 2 levels that will be determined once reservoir performance data has been acquired, the full aerial extent of the field has been determined, and a final development concept decided.
In the Llanos Basin, initial testing of the Melero-1 oil discovery in the Garibay Block where Gran Tierra Energy has a 50% interest and the operator CEPSA has a 50% interest, resulted in 922 barrels of oil per day flow rates. In addition, the Jilgero-2 appraisal well in the recent oil Jilgero oil discovery on the same block was drilled and completed. We are currently evaluating the results.
In Brazil, drilling of the GTE-01-BA oil exploration well in the onshore Recôncavo Basin began on October 7 and is drilling ahead. The well is located on Block 142 and is expected to reach total depth this month. Subject to evaluating core and lab results to determine if adequate reservoir is present, a drilling rig will return in December to drill a horizontal sidetrack from the pilot oil at the optimum depth to test the productivity of the reservoir target.
This will be the first of 3 horizontal wells that we plan to drill, with the next 2 to be drilled in the first quarter of 2012. Drilling of the GTE-2-BA oil exploration well on the adjacent Block 129 is expected to start drilling within a week and reach total depth in December of this year. In the offshore of Brazil, StatOil commenced drilling operations on the 1-STAT-7-BAS well on October 1, 2011.
Now in Argentina, Gran Tierra Energy completed workover programs on 16 wells in the Puesto Morales and Puesto Morales Este Blocks in the Neuquen Basin. Based on successful results, we've added 2 additional workovers in the fourth quarter. This is in addition to drilling 6 development wells, 4 before year end and 2 more early next year, and a further development well is planned for the Surubi Field in northern Argentina. In the Rinconada Norte Block of the Neuquen Basin, our partner and the operator, America Petrobras, drilled 3 wells with 1 well testing 1,023 BOE per day, which included 944 barrels of oil -- of light oil per day. Construction of production facilities are currently being planned by the operator.
Finally, moving to Peru, Gran Tierra Energy has identified a drilling location for the first exploration well Block 95, with civil construction initiated in the third quarter of 2011. Drilling is expected to be undertaken in 2012, pending regulatory approvals. This well will further appraise an oil discovery already made on the block, plus explore deeper horizons not penetrated by the discovery well.
Now permitting for station drilling on Block 107 is advancing, with drilling expected to begin in the second half of 2012. Geological and geophysical studies are ongoing on the adjacent Block 133 in preparation for seismic acquisition in 2012. Blocks 123 and 129, the joint venture with operator ConocoPhillips and partner Talisman are continuing preparations to acquire additional infill 2D seismic data in late 2011 and early 2012 on the primary posmics and leads identified in our first seismic program.
Now as part of our continuous and ongoing prioritization and rationalization of our portfolio, paperwork has been submitted by the respective operators for the relinquishment of Blocks 122, 124 and 128 as they are not competitive with the balance of our portfolio.
So in summary, we anticipate that the fourth quarter will be very eventful for Gran Tierra Energy, with exploration and development drilling results expected in Colombia, Brazil and Argentina, in addition to ongoing planning for a robust 2012 drilling program in those countries as well as in Peru. Our strong balance sheet, our vast land position of over 18 million gross acres across 4 countries with a very robust and diverse portfolio of drilling opportunities and operating teams with a track record of creating shareholder value has positioned the company for continued growth in 2012 and beyond. Details of our 2012 program should be finalized in December. I look forward to sharing those plans at that time and sharing our drilling results in the interim as they become available.
Comments from their conference call:
Gran Tierra Energy is currently undertaking the busiest period drilling in its history with 4 exploration wells to be drilled in Colombia and Brazil and 7 appraisal and development wells to be drilled in Colombia, Brazil and Argentina.
In Colombia, the Rumiyaco oil exploration well is drilling ahead, and we expect to reach total depth in November. This high-impact well in the Putumayo basin is testing a structural closure identified by 3D seismic data that is positioned in between 2 producing light oil trends.
The Pacayaco-1 sidetrack oil exploration well in the Chaza Block is expected to spud in December and reach total depth before year end. This is a sidetrack to an exploration well drilled early this year that encountered oil shows, but no reservoir. We are now targeting a different location picked after the acquisition and interpretation of a new 3D seismic data earlier this year. The Brillante-2 appraisal well, southeast to appraisal well, began drilling in October and the Brillante gas discovery in the lower Magdalena basin of Colombia. The intent of this well in Brillante southeast 3, which is scheduled to follow in December, is to define adequate reserves to justify the construction of a gas pipeline and commit to long-term gas sales contract. The well is expected to reach total depth of approximately 6,000 feet this month. A new 275-square-kilometer 3D seismic program has been acquired over the field and will be used for future development drilling, planning and potential exploration drilling around the Brillante discovery.
In the Putumayo Basin, we continue to experience success with the Moqueta oil discovery appraisal program. The Moqueta-6 sidetrack was drilled and encountered oil in the Kg sandstone, the U sandstone, the T sandstone, in the Caballos reservoirs. The primary T sandstone in Caballos reservoirs were encountered approximately 250 feet deeper than the equivalent reservoirs in Moqueta-5. The well has been tied into existing infrastructure, and the testing program has been initiated to confirm the nature of the fluids and reservoir productivity of the sandstones with results expected in approximately 1 month. This is being done in concert with ongoing long-term testing to evaluate the reservoirs in the other wells.
Average production from Moqueta field is expected to remain modest this year at approximately 500 barrels of oil per day. Production is expected to begin slowly ramping up in 2012, 2 levels that will be determined once reservoir performance data has been acquired, the full aerial extent of the field has been determined, and a final development concept decided.
In the Llanos Basin, initial testing of the Melero-1 oil discovery in the Garibay Block where Gran Tierra Energy has a 50% interest and the operator CEPSA has a 50% interest, resulted in 922 barrels of oil per day flow rates. In addition, the Jilgero-2 appraisal well in the recent oil Jilgero oil discovery on the same block was drilled and completed. We are currently evaluating the results.
In Brazil, drilling of the GTE-01-BA oil exploration well in the onshore Recôncavo Basin began on October 7 and is drilling ahead. The well is located on Block 142 and is expected to reach total depth this month. Subject to evaluating core and lab results to determine if adequate reservoir is present, a drilling rig will return in December to drill a horizontal sidetrack from the pilot oil at the optimum depth to test the productivity of the reservoir target.
This will be the first of 3 horizontal wells that we plan to drill, with the next 2 to be drilled in the first quarter of 2012. Drilling of the GTE-2-BA oil exploration well on the adjacent Block 129 is expected to start drilling within a week and reach total depth in December of this year. In the offshore of Brazil, StatOil commenced drilling operations on the 1-STAT-7-BAS well on October 1, 2011.
Now in Argentina, Gran Tierra Energy completed workover programs on 16 wells in the Puesto Morales and Puesto Morales Este Blocks in the Neuquen Basin. Based on successful results, we've added 2 additional workovers in the fourth quarter. This is in addition to drilling 6 development wells, 4 before year end and 2 more early next year, and a further development well is planned for the Surubi Field in northern Argentina. In the Rinconada Norte Block of the Neuquen Basin, our partner and the operator, America Petrobras, drilled 3 wells with 1 well testing 1,023 BOE per day, which included 944 barrels of oil -- of light oil per day. Construction of production facilities are currently being planned by the operator.
Finally, moving to Peru, Gran Tierra Energy has identified a drilling location for the first exploration well Block 95, with civil construction initiated in the third quarter of 2011. Drilling is expected to be undertaken in 2012, pending regulatory approvals. This well will further appraise an oil discovery already made on the block, plus explore deeper horizons not penetrated by the discovery well.
Now permitting for station drilling on Block 107 is advancing, with drilling expected to begin in the second half of 2012. Geological and geophysical studies are ongoing on the adjacent Block 133 in preparation for seismic acquisition in 2012. Blocks 123 and 129, the joint venture with operator ConocoPhillips and partner Talisman are continuing preparations to acquire additional infill 2D seismic data in late 2011 and early 2012 on the primary posmics and leads identified in our first seismic program.
Now as part of our continuous and ongoing prioritization and rationalization of our portfolio, paperwork has been submitted by the respective operators for the relinquishment of Blocks 122, 124 and 128 as they are not competitive with the balance of our portfolio.
So in summary, we anticipate that the fourth quarter will be very eventful for Gran Tierra Energy, with exploration and development drilling results expected in Colombia, Brazil and Argentina, in addition to ongoing planning for a robust 2012 drilling program in those countries as well as in Peru. Our strong balance sheet, our vast land position of over 18 million gross acres across 4 countries with a very robust and diverse portfolio of drilling opportunities and operating teams with a track record of creating shareholder value has positioned the company for continued growth in 2012 and beyond. Details of our 2012 program should be finalized in December. I look forward to sharing those plans at that time and sharing our drilling results in the interim as they become available.