Thirteen exploration wells and eight development wells in Colombia, Peru, Argentina and Brazil targeting a net risked
resource potential of 130 million barrels of oil and 120 billion cubic
feet of gas
CALGARY, Dec. 20 /CNW/ - Gran Tierra Energy Inc. ("Gran Tierra Energy") (NYSE Amex: GTE, TSX:
GTE), a company focused on oil exploration and production in South America,
today announced a 2011 capital spending program of US$299.2 million for
exploration and production development operations in Colombia, Peru,
Argentina and Brazil. The capital spending program includes US$146.9
million allocated for drilling and completions, $74.4 million for
facilities, equipment, pipelines and other costs, and US$77.9 million
for seismic activities. This budget includes the drilling of ten wells
in Colombia, three wells in Peru, two wells in Argentina and six wells
in Brazil. The approved 2011 budget also includes funds for 370 km of
2D and 495 km2 of 3D seismic acquisition programs in Colombia, Peru, Argentina and
Brazil, primarily in preparation for additional exploration and
production drilling operations in 2012.
The net risked prospective resource potential of the 2011 exploration
program totals approximately 130 million barrels of oil, with the Valle
Morado delineation well targeting a net risked prospective resource
potential of approximately 120 billion cubic feet of gas.
Excluding potential exploration success, production in 2011 is expected
to range between 21,500 to 23,500 barrels of oil equivalent per day ("BOEPD") gross, or 16,000 to 18,000 BOEPD net after royalty.
Gran Tierra Energy had US$308.4 million in cash and equivalents at the
end of the third quarter 2010 and has no debt. The 2011 work program
and budget is expected to be funded from cash-flow from operations with
the balance from cash on hand as necessary.
"Gran Tierra Energy greatly expanded its land position in 2010, while
retaining an exceptionally strong balance sheet, positioning the
company to undertake its most ambitious exploration program to date,"
said Dana Coffield, President and Chief Executive Officer of Gran
Tierra Energy. "A number of our exploration wells budgeted for 2010
have slipped into 2011 due to a variety of regulatory and operational
delays. These are planned to be drilled early in 2011 and are being
complemented with additional new exploration drilling opportunities.
In addition, development drilling and new facilities construction is
intended to bring on new production from new reserves found in 2010.
Finally, an extensive seismic program is being acquired in all four
countries in preparation for continued exploration and development
activities in 2012 and beyond."
The Colombia capital budget for 2011 is planned to be US$147.8 million.
Facility construction associated with ongoing development of the
Moqueta field along with further facility work at Costayaco, in
addition to other work, is expected to be US$30.1 million. US$53.0
million is budgeted for seismic acquisition and US$64.7 million is
budgeted for exploration and development drilling. During 2011, Gran
Tierra Energy expects to drill four gross exploration wells, two
stratigraphic test wells, four gross development wells, and acquire in
excess of 440 km2 of 3D seismic and 370 km of 2D seismic in Colombia. The six well
exploration program has a net risked resource potential of
approximately 15 million barrels of oil.
Gran Tierra Energy is the largest exploration landholder in the Putumayo
Basin of southern Colombia, with working interests in 10 exploration
and production licenses pending Colombia's National Hydrocarbon Agency
approval on the Putumayo 10 block. Total acreage encompasses 719,321
gross acres or 559,844 net acres.
Chaza Block (100% working interest and Operator)
With the successful discovery of oil at Moqueta in 2010, new
infrastructure construction is planned for the field including further
appraisal with two wells, Moqueta-5 and Moqueta-6, construction of a
six inch diameter, 8 km long flow line to Costayaco, gas reinjection
facilities, road access construction and full field development
Seismic acquisition is planned to continue on the Chaza block to further
delineate the Moqueta field and to evaluate new prospects along trend
Gran Tierra Energy intends to drill the Canangucho-1 exploration well to
the east of the Costayaco field in the first quarter of 2011.
Development drilling in the Costayaco field is planned to include one
horizontal water injector, Costayaco-14 on the western flank of the
field to provide additional pressure support for the T Sandstone and to
increase water disposal capacity.
Rumiyaco Block (100% working interest and Operator)
Rumiyaco-1, Gran Tierra Energy's first exploration well in the block, is
expected to be spud in the second quarter, 2011.
Azar Block (40% working interest and Operator)
Gran Tierra Energy plans to begin drilling the La Vega Este-1
exploration well in the third quarter of 2011.
Piedmonte Norte Block (100% working interest and Operator)
Gran Tierra Energy intends to drill a stratigraphic test well on the
Piedmonte Norte block in the third quarter of 2011.
Putumayo-10 Block (100% working interest and Operator)
Gran Tierra Energy intends on drilling a stratigraphic test well on the
Putumayo-10 block in the fourth quarter of 2011.
Guayuyaco Block (70% working interest and Operator)
Gran Tierra Energy intends on drilling a development well, Juanambu-3,
in the Juanambu Field in the first quarter of 2011.
Garibay Block (50% non-operated working interest; CEPSA is operator with
50% working interest)
Plans to drill a second exploration well on the Garibay Block, Melero-1,
are currently underway with the operator of the block intending to
begin drilling in the second quarter of 2011.
Cauca-6 and Cauca-7 (100% working interest and Operator, pending E&P
Pending final execution of contract with the National Hydrocarbon Agency
for these two frontier exploration blocks encompassing approximately
1.36 million acres, Gran Tierra Energy intends to acquire regional
gravity and magnetic surveys, conduct surface geologic studies, and
acquire approximately 200 km of 2D seismic data.
Gran Tierra Energy has accumulated a large land position in Peru,
encompassing approximately 11.4 million gross acres or 5.5 million net
acres on 6 blocks in the Marañon Basin. The Peru budget of $55.9
includes drilling three exploration wells with drilling costs
anticipated to be US$34.2 million and approximately US$19.2 million
budgeted for seismic work. Gran Tierra Energy is targeting a net
risked resource potential of 105 million barrels of oil in Peru.
Blocks 122 & 128 (100% working interest)
These blocks are located on the eastern flank of the Marañon Basin of
northern Peru, and encompass 3.4 million acres of land over the crest
and flanks of the Iquitos Arch. To date, more than one billion barrels
of recoverable oil has been discovered in the adjacent Marañon
Basin. Gran Tierra Energy plans to begin drilling the first exploration
well, Kanatari-1, in Block 128 in January, 2011. This is expected be
followed by a second exploration well, Pichico-1, on Block 122 in the
third quarter of 2011.
Blocks 123, 124 & 129 (20% non-operated working interest; ConocoPhillips
is the Operator)
Seismic acquisition and processing is planned to continue in 2011 in
Blocks 123, 124 and 129, with exploration drilling environmental impact
assessments to be conducted concurrently in blocks 123 and 129.
Block 95 (60% working interest and Operator; Global Energy Development
is non-operating partner with 40% working interest)
Upon approval of assignment of interests to Gran Tierra Energy by
PeruPetro, Gran Tierra Energy plans to drill one exploration well in
Block 95 in the fourth quarter of 2011. The contract area contains the
Bretaña-1 well, which was drilled in 1974 and tested 18° API gravity
oil on natural flow rates of approximately 800 barrels of oil per day.
Gran Tierra Energy is the largest exploration landholder in the Noroeste
Basin of northern Argentina. Gran Tierra Energy has a working interest
in seven blocks of land it operates, encompassing approximately 1.6
million gross acres, or 1.3 million net acres.
Argentina's capital budget of US$39.8 million includes US$30.6 million
allocated to drilling and US$7.3 million associated with facility
construction, and US$1.9 million in geological and geophysical work.
Drilling capital includes capital to conclude drilling the VM.x-1001
initiated late in 2010, in addition to one development well planned to
be drilled in the Palmar Largo oil field and one development well
planned to be drilled in the Surubi oil field in the first and third
In the Valle Morado block, the re-entry and sidetrack of the VM.x-1001
well is ongoing and expected to conclude in March, 2011. The sidetrack
well is being drilled to test the resource potential discovered by the
VM.x-1001 well. Existing pipeline and gas processing plant capacity is
capable of handling 30 million standard cubic feet of gas per day.
With potential success at the VM.x-1001 well, Gran Tierra Energy's
Argentina production could grow to approximately 3,000 BOEPD net after
royalty in the fourth quarter of 2011. Gran Tierra Energy is targeting
a net risked resource potential of 120 billion cubic feet of gas in
Upon the anticipated regulatory approval from Brazil's Agência Nacional
de Petróleo, Gás Natural e Biocombustíveis ("ANP"), Gran Tierra Energy will become the operator and hold a 70% working
interest in Blocks REC-T-129, -142, -155 and -224 in the onshore
Recôncavo Basin. Gran Tierra Energy has budgeted US$54.7 million for
Brazil with US$17.4 million budgeted for drilling and completions.
Upon approval from the ANP, Gran Tierra Energy expects to spud the first
conventional light oil exploration well in Block 129 in the second
quarter, 2011. This is planned to be followed by up to three
additional exploration wells including two wells on Block 142 and one
well on Block 155. This program is targeting a net risked resource
potential of 10 million barrels of oil. In addition, 2 development
wells are planned on Block 155 in an existing light oil discovery with
an estimated unaudited gross recoverable resource of 6 million barrels
Colombia - Chaza Block
The Pacayaco-1 exploration well in the Chaza Block has reached 9,910
feet measured depth without encountering the expected target reservoir
sandstones. An unexpectedly thick Villeta shale section was
encountered, with thin sandstone and limestone intervals encountered
that had poor to fair oil shows. Hole integrity and drilling issues
did not allow drilling to continue deeper. The results are
inconsistent with the existing 2D seismic interpretation, so the well
has been suspended until the acquisition of new 3D seismic over the
prospect is completed in January and subsequently interpreted. A
decision will then be made whether to deepen or sidetrack the well to a
more optimal bottom-hole location.
Location construction for the Canangucho-1 exploration well in the Chaza
Block is ongoing. Drilling is expected to commence in January, 2011.
Mobilization of the rig to drill the Moqueta-4 delineation well in the
Moqueta oil discovery, also in the Chaza Block, is ongoing with
drilling expected to commence in late December.
Mobilization of the rig to drill the Taruka-1 exploration well in the
Piedemonte Sur Block is ongoing with drilling expected to commence in
Peru - Blocks 122, 123, 124, 128 and 129
Location construction for the Kanatari-1 exploration well in Block 122
is nearing completion and rig mobilization is planned to begin in late
December. Drilling is expected to commence in mid-January, 2011.
Seismic acquisition operations are ongoing in Block 122.
A 900 km 2D seismic acquisition program is ongoing in Blocks 123 and
Argentina - Valle Morado Block
Drilling of the VM.x-1001 sidetrack in the Valle Morado gas field is
continuing at approximately 10,600 feet measured depth; drilling is
expected to be completed in February, 2011. Testing is expected to
commence in the second quarter of 2011.
Brazil - Blocks REC-T-129, -142, -155 and -224
A new 93 km2 3D seismic acquisition survey covering Blocks REC-T-129, -142 and -155 has been completed and is currently being processed, as reported by the
block's concessionaire Alvorada Petróleo. This newly acquired seismic
data is expected to be used to finalize two development and four
exploration well locations for drilling in 2011.
About Gran Tierra Energy Inc.
Gran Tierra Energy is an international oil and gas exploration and
production company, headquartered in Calgary, Canada, incorporated in
the United States, trading on the NYSE Amex Exchange (GTE) and the
Toronto Stock Exchange (GTE), and operating in South America. Gran
Tierra Energy holds interests in producing and prospective properties
in Argentina, Colombia, Peru, and Brazil. Gran Tierra Energy has a
strategy that focuses on establishing a portfolio of producing
properties, plus production enhancement and exploration opportunities
to provide a base for future growth.
Gran Tierra Energy's Securities and Exchange Commission filings are
available on a web site maintained by the Securities and Exchange
Commission at http://www.sec.gov and on SEDAR at http://www.sedar.com.
Additional information concerning Gran Tierra Energy is available at www.grantierra.com, on SEDAR (www.sedar.com) and with the Securities and Exchange Commission (www.sec.gov).
Forward-Looking Statements and Advisories
This news release contains certain forward-looking information and
forward-looking statements (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian
Securities Administrators' National Instrument 51-102 - Continuous Disclosure Obligations and the United States Private Securities Litigation Reform Act of 1995.
The use of the words "expects", "expected", "anticipated", "targeting",
"potential", "positioning", "planned", "plans", "continued", "intends",
"estimated," "will" and similar words identify forward-looking
statements. In particular, but without limiting the foregoing, this
news release contains forward-looking statements regarding Gran Tierra
Energy's planned and expected capital expenditures, drilling,
construction, acquisition of seismic, production and resource potential
in South America.
The forward-looking statements contained in this news release reflect
several material factors and expectations and assumptions of Gran
Tierra Energy including, without limitation, assumptions relating to
field size and recoverability. Gran Tierra Energy believes the material
factors, expectations and assumptions reflected in the forward-looking
statements are reasonable at this time but no assurance can be given
that these factors, expectations and assumptions will prove to be
The forward-looking statements contained in this news release are
subject to risks, uncertainties and other factors that could cause
actual results or outcomes to differ materially from those contemplated
by the forward-looking statements, including, among others: certain
farm-in contracts are subject to regulatory approval, the timing and
results of which are outside of Gran Tierra Energy's control, which
approval if not obtained or delayed could cause the transaction not to
occur, thereby decreasing Gran Tierra Energy's participation interests;
unexpected technical difficulties and operational difficulties may
occur, or delays in obtaining necessary permits may continue which
could impact or delay the commencement of drilling exploration wells;
Gran Tierra Energy's operations are located in South America, and
unexpected problems can arise due to guerilla activity; geographic,
political and weather conditions can impede testing, which could impact
or delay the commencement of drilling exploration wells; and the risk
that current global economic and credit market conditions may impact
oil prices and oil consumption more than Gran Tierra Energy currently
predicts, which could cause Gran Tierra Energy to modify its
exploration and drilling activities. Although the current capital
spending program is based upon the current expectations of the
management of Gran Tierra Energy, there may be circumstances where, for
unforeseen reasons, a reallocation of funds may be necessary as may be
determined at the discretion of Gran Tierra Energy and there can be no
assurance as at the date of this press release as to how those funds
may be reallocated. Should any one of a number of issues arise, Gran
Tierra Energy may find it necessary to alter its current business
strategy and/or capital spending program. Accordingly, readers should
not place undue reliance on the forward-looking statements contained
herein. Further information on potential factors that could affect Gran
Tierra Energy are included in risks detailed from time to time in Gran
Tierra Energy's Securities and Exchange Commission filings, including,
without limitation, under the caption "Risk Factors" in Gran Tierra
Energy's Quarterly Report on Form 10-Q filed November 4, 2010. These
filings are available on a Web site maintained by the Securities and
Exchange Commission at http://www.sec.gov and on SEDAR at
The forward-looking statements contained herein are expressly qualified
in their entirety by this cautionary statement. The forward-looking
statements included in this press release are made as of the date of
this press release and Gran Tierra Energy disclaims any intention or
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except as
expressly required by applicable securities legislation.
BOEs may be misleading, particularly if used in isolation. A BOE
conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
SOURCE Gran Tierra Energy Inc.
For further information: For further information:
For investor and media inquiries please contact:
Director, Investor Relations