Gran Tierra Energy Encounters Good Oil Shows With Costayaco-5 in Colombia; Preparing to Test



    
    Drilling and Testing Operations Update for Colombia and Argentina

    
    CALGARY, Alberta, Aug. 6 /CNW/ -- Gran Tierra Energy Inc. (Amex:   GTE;
TSX: GTE), a company focused on oil exploration and production in South
America, today provided details on its exploration and delineation drilling
programs, and infrastructure development taking place in Colombia and
Argentina.

    
    COLOMBIA
    

    
    Chaza Block: Costayaco Field
    Costayaco-5 Drilling and Testing
    
    Gran Tierra Energy completed drilling of Costayaco-5 on July 27, 2008
when total measured depth of 8,703 feet was reached in basement.  The well was
successfully cased on July 31, 2008.  The company encountered good oil shows
in cuttings in the Kg Sand Unit of the Rumiyaco Formation, the U Sandstone
Unit of the Villeta Formation, the T Sandstone Unit of the Villeta Formation
and the Upper Caballos Formation.
    Electric logs, cuttings and shows indicate excellent reservoir with fair
to good oil saturations in the primary Villeta T reservoir, with thicknesses
comparable to previous wells in the field.  No definitive oil-water contact is
apparent in the Villeta T reservoirs, but testing will be required to confirm
whether water is present in certain intervals.  The Upper Caballos reservoirs
also appear to have good oil saturations and thicknesses comparable to
previous wells drilled in the field.  The Lower Caballos reservoirs are well
developed, but appear to be water bearing.  The top of the Villeta T and
Caballos were encountered at a shallower depth than expected and oil shows
were encountered deeper than expected in both the Villeta T and the Upper
Caballos reservoirs; both results have the potential to add significant
reserves to the west flank of the field.  Testing operations are expected to
commence in mid-August and will take approximately one month to complete.
    The recently reported Costayaco mid-year reserve update did not
incorporate potential oil at the Costayaco-5 location as this well was drilled
outside the control provided by previously drilled Costayaco wells.  The
report indicated that effective July 1, 2008, the Costayaco field had gross
proved reserves of 20.5 million barrels of oil, gross proved plus probable
reserves of 34.9 million barrels of oil and gross proved plus probable plus
possible reserves of 61.4 million barrels of oil.  If hydrocarbon testing is
successful, these new reserves will be incorporated in Gran Tierra Energy's
year-end 2008 reserve report.
    
    Costayaco-4 Testing
    
    Gran Tierra Energy is expected to commence testing of Costayaco-4 in
early August, 2008; delayed due to the extended testing at Palmera-1 by the
test rig.  Log interpretations from data acquired after drilling indicate
potential hydrocarbon pay in the Kg Sand Unit of the Rumiyaco Formation, in
addition to 14 feet in the U Sandstone Unit of the Villeta Formation, 38 feet
in the T Sandstone Unit of the Villeta Formation and 125 feet in the Caballos
Formation.  This is almost 25% more potential net pay than in any of the
previous three wells in the field.  Gran Tierra Energy expects this testing
program to take approximately one month.
    
    Additional Drilling
    
    The drilling of Costayaco-6 and initiating of drilling of Costayaco-7
remain on the program for 2008, with a continuous delineation and development
drilling campaign in the Costayaco field continuing through 2009.  The details
of the 2009 program will be finalized in the fourth quarter of 2008.
    
    Infrastructure
    
    An 8 inch, 10 kilometer pipeline from the Costayaco field to the
Uchupayaco Station on the existing pipeline system was completed on July 29,
2008 and is currently being tested.  This new pipeline will have a capacity of
approximately 25,000 barrels of oil per day.  Initial throughput will be
approximately 8,500 barrels of oil per day due to facility constraints further
downstream in the existing pipeline system.  The company is developing options
to increase production utilizing trucks to by-pass infrastructure constraints
and expects gross Costayaco field production to rise to approximately
13,000-15,000 barrels of oil per day by year-end 2008, with additional
production capacity behind pipe.
    The Costayaco field is located in the Chaza Block in the Putumayo Basin,
where the company has a 50% working interest and is the operator, with Solana
Resources holding the remaining 50% working interest.
    
    Azar Block: Palmera-1 Tests First Oil
    
    Gran Tierra Energy initiated re-entry operations of the Palmera-1 well in
May 2008, an exploration well drilled in 1996 that had potential oil pay in
the Kg Sandstone of the Rumiyaco Formation indicated on logs but was never
tested.  Drill stem testing operations were conducted in June and July after a
liner was set and perforated from 7,876 to 7,878 feet measured depth in the Kg
Sandstone.
    Stabilized natural flow of 13-15 degree API oil at a rate of
approximately 47 barrels of oil per day with no water was obtained.  The
reservoir and oil appear to be similar to the producing Miraflor field in the
adjacent Santana Block operated by Gran Tierra Energy.  The well has been
completed with a production string and will be shut-in for two months to
evaluate optimum artificial lift systems and production facilities.  The
company expects initial production rates from the well to be in the range of
150 bopd to 250 bopd gross with artificial lift, with early production to be
transported by truck.
    Gran Tierra Energy is operator of the Azar Block and has an 80% working
interest. Under the terms of a farm-in agreement, Lewis Energy will earn a 50%
share of the company's interest by paying 100% of Gran Tierra Energy's costs
associated with the first three exploration periods, including the Palmera-1
workover and drilling of one exploration well. The Azar Block is subject to
the Agencia Nacional de Hidrocarburos (ANH) contract terms, with attractive
fiscal terms including a sliding scale royalty commencing at 8% and no back-in
rights by the state company Ecopetrol.
    
    Rio Magdalena Block: Popa-2 Testing Operations Continuing
    
    Gran Tierra Energy initiated drill-stem testing operations of the Popa-2
exploration well in the Rio Magdalena Block in the Middle Magdalena Basin, on
July 4, 2008. The company encountered oil and gas shows during drilling in the
Cretaceous Monserrate Formation, the primary reservoir target in the Popa
prospect, and in the underlying basement.  Four drill-stem tests have been
completed and three additional drill-stem tests have been added.  Results of
the testing are expected in late August.
    Gran Tierra Energy, with a 100% working interest, is the operator of the
144,670 acre Rio Magdalena Block.  Under the terms of a recently completed
farm-in agreement, Omega Energy Colombia will earn a 60% share of the
company's interest by paying 100% of the costs associated with drilling,
testing and completing the Popa-2 well.  In the event of a commercial
discovery, Ecopetrol S.A. has a right to back in for a 30% working interest,
to be split proportionally between Gran Tierra Energy and Omega Energy
Colombia.
    
    ARGENTINA
    Surubi Block -- Proa.x-1 Exploration Well
    
    Gran Tierra Energy began drilling the Proa.x-1 exploration well on July
9, 2008.  The well is planned to be drilled to a depth of 12,992 feet to test
the Cretaceous Palmar Largo reservoir section, which is productive in the
Palmar Largo field approximately 2 miles to the northeast in the adjacent
Palmar Largo Block.  The company expects drilling to be completed in late
August.
    In addition, Gran Tierra Energy obtained provincial ratification of a new
contract for the 90,688 gross acre Surubi Block with the Formosa Province on
July 29, 2008.  This new contract includes a 10-year contract extension to
August 15, 2026.  As part of this revised agreement, Gran Tierra Energy has
assigned a 15% working interest to REFSA (Recursos Energeticos Formosa S.A.),
the provincial government company, while retaining an 85% working interest and
operatorship. REFSA will be carried by Gran Tierra Energy during drilling of
the Proa.x-1 well. In the event of success, Gran Tierra Energy will be
reimbursed for all of the costs incurred during drilling from 50% of the net
production assigned to REFSA. The provincial royalties payable on production
in the revised contract vary from 12% for cumulative production below 750,000
cubic meters of oil (approximately 4.7 million barrels), to 14% for cumulative
production between 750,000 to 1,500,000 cubic meters of oil (approximately 9.4
million barrels), and to 16% for cumulative production above 1,500,000 cubic
meters of oil.
    
    SUMMARY
    
    Commenting on the drilling and testing progress, Dana Coffield, President
and Chief Executive Officer of Gran Tierra Energy Inc., stated, "These are
outstanding preliminary results from Costayaco-5.  Successful testing of oil
from this well has the potential to significantly add to the total reserve
potential of the Costayaco field, which has already grown significantly in
size as delineation drilling has shown in the first half of 2008.  With our
first produced oil on the nearby Azar Block, and the promising testing taking
place in the Rio Magdalena Block, and exploration drilling continuing in
Argentina, the third quarter of this year is proving to be particularly
exciting for Gran Tierra Energy."
    
    About Gran Tierra Energy Inc.:
    
    Gran Tierra Energy Inc. is an international oil and gas exploration and
production company operating in South America, headquartered in Calgary,
Canada, incorporated in the United States, and trading on the American Stock
Exchange (Amex:   GTE) and the Toronto Stock Exchange (TSX: GTE). The company
holds interests in producing and prospective properties in Argentina, Colombia
and Peru. The company has a strategy that focuses on growing a portfolio of
producing properties, plus production enhancement and exploration
opportunities to provide a base for future growth. Additional information
concerning Gran Tierra Energy is available at http://www.grantierra.com.
Investor inquiries may be directed to info@grantierra.com or 1-800-916-GTRE
(4873).
    
    Cautionary Statement:
    
    Possible reserves are those additional reserves that are less certain to
be recovered than probable reserves.  There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of proved plus
probable plus possible reserves. The estimate of reserves for individual
properties may not reflect the same confidence level as estimates of reserves
for all properties, due to the effects of aggregation.
    
    Forward Looking Statements:
    
    The statements in this news release regarding Gran Tierra Energy's plans
and expectations for reserves, production, drilling, testing and
infrastructure, including the timing of commencement and completion of these
events, are forward looking information, forward looking statements or
financial outlooks (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.  These
forward-looking statements 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.  Although, Gran Tierra
Energy believes that the assumptions underlying, and expectations reflected
in, these forward-looking statements are reasonable, it can give no assurance
that these assumptions and expectations will prove to be correct. Important
factors that could cause the results or outcomes discussed herein to differ
materially from those indicated by these forward-looking statements include,
among other things:  Gran Tierra Energy's operations are located in South
America, and unexpected problems can arise due to guerilla activity, technical
difficulties and operational difficulties which impact the production,
transport or sale of oil and gas; and unexpected problems due to technical
difficulties, operational difficulties, and weather conditions.  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 "Item 1A -- Risk Factors" in Part II of Gran Tierra Energy's
Quarterly Report on Form 10-Q for the period ended March 31, 2008, filed with
the Securities and Exchange Commission on May 12, 2008.  These filings are
available on a Web site maintained by the Securities and Exchange Commission
at http://www.sec.gov. The forward-looking statements contained herein are
made as at the date of this press release. Subject to its obligations under
applicable law, Gran Tierra Energy does not undertake an obligation to update
forward-looking or other statements in this release. Gran Tierra Energy's
forward-looking statements are expressly qualified in their entirety by this
cautionary statement.

    
     Contacts:
    

    
     Dana Coffield                                 Al Palombo
     Gran Tierra Energy Inc.                       Cameron Associates
     President & Chief Executive Officer           Investor Relations
     (800) 916-4873                                (212) 245-8800 Ext. 209
     info@grantierra.com                           al@cameronassoc.com

    




For further information:

For further information: Dana Coffield, President & Chief Executive
Officer of Gran Tierra Energy Inc., 1-800-916-4873, info@grantierra.com; or Al
Palombo, Investor Relations of Cameron Associates, +1-212-245-8800, Ext. 209,
al@cameronassoc.com, for Gran Tierra Energy Inc. Web Site:
http://www.grantierra.com/

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