Gran Tierra Energy Announces Increased Working Interest and Contingent Resource Estimate for Block 95, Peru 06/11 07:00 AM
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Operations Update, With New 3-D Seismic Data Increasing Moqueta Structural Closure Area
CALGARY, June 11, 2012 /PRNewswire/ - Gran Tierra Energy Inc. (GTE:$4.92,00$-0.21,00-4.09%) ("Gran Tierra Energy") , a company focused on oil exploration and production in South America, today provided updates for its operations in Colombia, Argentina and Peru.
Peru
Block 95, Marañon Basin(Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) 100% WI and operator subject to PeruPetro S.A. and Peruvian Government approvals)
Gran Tierra Energy Peru S.R.L. has entered into an agreement to purchase the remaining 40% working interest in Block 95 from Global Energy Development PLC. Subject to PeruPetro S.A. and Peruvian Government approvals, Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) will have a 100% working interest in Block 95.
In addition, Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) announces the results of a contingent gross lease resource estimate for an oil discovery on Block 95, provided by its independent reserves auditor, GLJ Petroleum Consultants ("GLJ") effective June 1, 2012. The resource estimate has been prepared in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook.
Low estimate "1C" contingent resources of 11.5 million stock tank barrels of oil ("MMSTB")
Best estimate "2C" contingent resources of 31.6 MMSTB
High estimate "3C" contingent resources of 88.1 MMSTB
There is no certainty that it will be commercially viable to produce any portion of the resources. Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status. The recoverable resources attributed to the Block 95 discovery were considered sub-commercial (contingent resources) due to the absence of a commitment to proceed with development and the fact that development is in the very early stages as considered from the point of view of both regulatory requirements, and development strategy. It is premature to determine the economic status; the economic status is undetermined until additional fluid samples confirm the market for the crude and Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) has done additional work on the oil market, development capital and environmental/regulatory matters.
The oil field discovered on Block 95, with the Bretaña 10-16-1X discovery well drilled in 1974, flowed 807 barrels of oil per day naturally without pumps for approximately six hours from the Vivian Formation. Well records indicate inconsistent oil gravity values of 13.1° API and 17.6° API. As the Bretaña well is located in a remote location, an oil gravity of 13.1° API will make this project challenging to develop in the current economic environment. If the oil gravity is 17.6° API, this project will likely be economic to develop in the current economic environment. Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) is planning to drill a new exploration well in the fourth quarter of this year to further delineate this field and to explore deeper reservoir horizons not penetrated by the discovery well. A drilling site location has been identified and civil construction initiated for the Bretaña Norte 95-2-1X exploration well on this structure.
Colombia
Chaza Block, Putumayo Basin (Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) 100% WI and operator)
A 3-D seismic program has now been acquired over the Moqueta Field. The new maps over the field indicate the eastern flank of the structure extends more than 2.5 kilometers to the northeast at the level of the lowest known oil in existing well bores in the field, implying additional reserve potential may exist on the east flank of the structure that had not previously been recognized. A new well to evaluate this additional potential is being designed for drilling late this year.
Mobilization for a drilling rig is underway for the Moqueta-7 appraisal well in the Moqueta field, which is expected to be spud in early July. This well is targeting additional appraisal of the down-dip extent of the oil columns encountered in the Villeta U, Villeta T and Caballos reservoirs in the field approximately 960 meters west-southwest of the Moqueta-4 appraisal well. Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) intends to target the interpreted oil-water contact, which has not yet been encountered by drilling, approximately 225 feet below the lowest known oil in existing well bores in the field; Moqueta-7 could be used as an oil producer or water injector for pressure support depending on the well results.
The Costayaco-16 development well spud on June 6, 2012; this well is intended to be a producing well to assist with maintaining plateau production in the Costayaco Field.
Azar Block, Putumayo Basin (Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) 40% WI and Operator, Lewis Energy Colombia Inc. 40% WI, Gold Oil 20% WI subject to Agencia Nacional de Hidrocarburosapproval)
The La Vega Este-1 oil exploration well spud on May 14, 2012 and is targeting the same Cretaceous sandstone intervals present in the Costayaco and Moqueta discoveries. Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) expects the La Vega Este well to reach total depth at the end of June, with results expected in July.
Garibay Block, Llanos Basin (Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) 50% WI, CEPSA 50% WI and operator)
The Bordon-1 oil exploration well spud on June 6, 2012 and is expected to reach total depth in late July, with results expected in August.
Argentina
Puesto Guevara Block, Neuquen Basin (Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) 100% WI and operator)
The Los Incas x-1 oil exploration well in the Puesto Guevara Block has been drilled and is being plugged and abandoned after encountering only minor oil shows.
Production Update
May production and sales have been impacted by additional disruptions on the Ecopetrol-operated Oleoducto Transandino ("OTA") pipeline in Colombia. Gran Tierra Energy (GTE:$4.92,00$-0.21,00-4.09%) continued production at a reduced rate while the OTA pipeline was down, selling a portion of its crude through trucking and storing excess crude. Production, net after royalties and before changes in inventory and losses for the months of April and May averaged approximately 18,000 barrels of oil equivalent per day. Production is expected to return to normal levels mid-June.
gte
Re: gte Ests and Target Price
Analyst Actions: Gran Tierra Energy Ests and Target Price 06/12 11:52 AM
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12:52 PM EDT, 06/12/2012 (MidnightTrader) -- Lower Production on Pipeline Disruption: "Continued pipeline disruptions on the OTA pipeline have resulted in lower than expected production in Colombia. Average production quarter to date looks to be in the vicinity of 18 mboe/d NAR. The company expects production to normalize by mid-June 2012 but we note that continued disruptions could put pressure on the company's full year guidance of between 20 mboe/d NAR to 21 mboe/d NAR. Our production estimate for 2012E has been revised downward by ~4% to 19,440 boe/d NAR and our cash flow for 2012E has been reduced to US$1.60 per share (from US$1.75 per share). Our 2012 EPS estimate is lowered to $0.76 from $0.86. Our 2013E estimates remain largely unchanged."
Consolidation in Peru: "The company announced it has agreed to purchase the remaining 40% WI in Block 95 in Peru from its partner for a total consideration of ~US$5.4 million. Gran Tierra also provided a best estimate contingent resource figure of approximately 32 mmbbls recoverable for Block 95, which was slightly higher than our assumption of 25 mmbbls. Incorporating the change in resources and working interest did not materially move our risked NAV valuation as we have assigned a relatively low 5% chance of success to the project. The first exploration well, Bretana Norte 95-2-1X, looks to be drilled in Q4/12 with civil construction on the drilling site having commenced."
Moqueta Could Deliver More: "Recent 3D seismic data suggests that the field could materially extend to the northeast. The company looks to explore for this additional potential by drilling a well there in late 2012."
Valuation: "We maintain our Outperform rating but have revised downward our target price to C$8.00 (from C$9.00) to reflect lower 2012E production."
Price: 4.85, Change: -0.01, Percent Change: -0.2
http://www.midnighttrader.com
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12:52 PM EDT, 06/12/2012 (MidnightTrader) -- Lower Production on Pipeline Disruption: "Continued pipeline disruptions on the OTA pipeline have resulted in lower than expected production in Colombia. Average production quarter to date looks to be in the vicinity of 18 mboe/d NAR. The company expects production to normalize by mid-June 2012 but we note that continued disruptions could put pressure on the company's full year guidance of between 20 mboe/d NAR to 21 mboe/d NAR. Our production estimate for 2012E has been revised downward by ~4% to 19,440 boe/d NAR and our cash flow for 2012E has been reduced to US$1.60 per share (from US$1.75 per share). Our 2012 EPS estimate is lowered to $0.76 from $0.86. Our 2013E estimates remain largely unchanged."
Consolidation in Peru: "The company announced it has agreed to purchase the remaining 40% WI in Block 95 in Peru from its partner for a total consideration of ~US$5.4 million. Gran Tierra also provided a best estimate contingent resource figure of approximately 32 mmbbls recoverable for Block 95, which was slightly higher than our assumption of 25 mmbbls. Incorporating the change in resources and working interest did not materially move our risked NAV valuation as we have assigned a relatively low 5% chance of success to the project. The first exploration well, Bretana Norte 95-2-1X, looks to be drilled in Q4/12 with civil construction on the drilling site having commenced."
Moqueta Could Deliver More: "Recent 3D seismic data suggests that the field could materially extend to the northeast. The company looks to explore for this additional potential by drilling a well there in late 2012."
Valuation: "We maintain our Outperform rating but have revised downward our target price to C$8.00 (from C$9.00) to reflect lower 2012E production."
Price: 4.85, Change: -0.01, Percent Change: -0.2
http://www.midnighttrader.com