Solana Resources Limited announces commencement of testing operations on Costayaco-3 and drilling operations on Costayaco-4 in the Chaza Block, Putumayo Basin, Southern Colombia. Infrastructure expansions to handle Putumayo production continue in parallel. Solana also notes the recommencement of testing operations at Tres Curvas in the Catguas Block, Catatumbo Basin, and the commencement of drilling operations on Palmitas-2 in the Guachiria Sur Block, Llanos Basin.
Costayaco-3, Chaza Block
Testing operations on Costayaco-3, the third well drilled in the Costayaco light oil field that was discovered in the second quarter of 2007, commenced March 19, 2008. The well is located 950 metres west and down dip of the Costayaco-1 discovery well. Drilling commenced January 25, 2008, and reached a total depth of 8,620 feet on February 20, 2008. Costayaco-3 encountered the same reservoir sequences with similar good oil and gas shows as the other Costayaco wells. Initial log interpretations indicate hydrocarbon pay across the Rumiyaco Kg Formation, the Villeta U Sand Formation, the Villeta T Sand Formation and the Caballos Formation. Log quality precludes the ability to conclusively identify oil water contacts. Drill stem testing will be required to ascertain the nature of the fluid content.
Testing operations are expected to take one month. Similar to Costayaco-2, which tested at a combined maximum flow rate in excess of 6,600 barrels of oil per day (BOPD), only the primary Villeta T and Caballos formations will be tested.
Solana holds a non-operated 50% working interest in the Chaza block that is held under a fiscally attractive Agencia Nacional de Hydrocarburos contract. Gran Tierra Energy holds the other 50% working interest.
Costayaco-4, Chaza Block
Drilling operations commenced at Costayaco-4 on March 16, 2008, and are expected to take approximately six weeks. This deviated well is being drilled from the Costayaco-2 surface location targeting a down hole location some 540 meters to the north. Cores are planned to be taken across the main reservoirs.
Wells Costayaco-5 through -7 are budgeted for the remainder of 2008.
Costayaco-2, Chaza Block
A long term test is planned for Costayaco-2 in the next four months. Both the Caballos and Villeta T reservoirs will be tested. Production rates are expected to vary from 1,800 BOPD to 3,500 BOPD. A six inch production flow line from Costayaco-2 to the Costayaco-1 truck loading facility has been completed and is expected to be operational by the end of March 2008.
Costayaco-1, Chaza Block
The Costayaco-1 discovery well is continuing to produce approximately 3,500 BOPD (gross) from the Caballos and Villeta T reservoirs. Crude from Costayaco-1 and Costayaco-2 will continue to be trucked to the Uchupayaco battery and into the existing pipeline infrastructure. An eight inch, 10 kilometre pipeline, tying Costayaco-1 into Uchupayaco, is expected to be completed in June 2008, and will replace the current trucking operations. To date, line-pipe has been delivered to the field and environmental permits have been approved.
Putumayo Infrastructure
Work is underway to reduce existing infrastructure production constraints beyond Uchupayaco. It is currently anticipated that 6,000 - 9,000 BOPD gross could be accommodated during the second half of 2008. A second stage of infrastructure expansion, to accommodate the anticipated increase in production from the continuing Costayaco drilling program, is currently being evaluated.
Juanambu, Guayuyaco Block
The Juanambu light oil field, discovered in the first quarter of 2007, has been tied into existing infrastructure. A six kilometre flow line was completed on February 29, 2008, and replaces trucking operations. Approximately 1,300 to 1,500 BOPD (gross) is now being transported through the flow line. The Juanambu oil field is in the Guayuyaco Block, Putumayo Basin, where Solana holds a non-operated 35% working interest, Gran Tierra Energy holds a 35% working interest and Ecopetrol S.A. holds a 30% working interest.
Palmitas-2, Guachiria Sur Block
Drilling operations commenced at Palmitas-2 on March 21, 2008, and are expected to take approximately three weeks. This well is testing a structural closure defined by 2D seismic data. Targeted formations are the Carbonera C5 and C7 and total depth is forecasted to be 6,900 feet. The Palmitas-2 well is in the Guachiria Sur Block, Llanos Basin, where Solana holds an operated 100% working interest. Lewis Energy Colombia holds a 30% beneficial interest in this block.
Tres Curvas-1, Catguas Block
Testing operations recommenced at Tres Curvas-1 on March 18, 2008, following the introduction of a revised security protocol instituted in cooperation with the Government of Colombia. Operations had been temporarily suspended due to an increase in security issues. Tres Curvas-1 is located in the highly prospective Catguas Block, Catatumbo Basin, where Solana holds a 100% operated working interest. Trayectoria Oil and Gas, Sucursal Colombia holds a 15% beneficial interest in 70% of the block and a 50% beneficial interest in the remainder.
