Colombia bidding round 2014 – preliminary award of 3 discovered oil fields
The Board of Andes (AIM: AEN; BCBA: AEN) is pleased to announce, as part of the Colombia bidding round 2014, the preliminary award of three undeveloped fields with conventional oil discoveries, located in the Llanos basin in Colombia.
· Andes, with a 70 % working interest, and its partner Integra Oil & Gas with a 30% working interest, have been preliminary awarded three undeveloped fields with conventional oil discoveries.
· YD Llanos 5, YD Llanos 8 and YD Llanos 2 are all located in the Llanos basin in the Casanare and Meta departments.
· All three blocks have previous discoveries which have produced medium and light oil at rates of between 350 and 2,400 bpd and are currently shut in.
· Part of the area covered by these blocks could have potential for unconventional production from the Gacheta formation (Source: EIA), which will be further evaluated.
Alejandro Jotayan, CEO of Andes, commented: “The new fields will allow Andes to have a production base in Colombia, diversify the current cash flow source and add to our portfolio a potential emerging unconventional oil play to which we can apply our knowledge and experience in this type of play.”
YD Llanos 5 has a surface area of 17,000 acres. A discovery well drilled in 2008 tested initially at a rate of 350 bpd from the Guadalupe formation. The block has existing 2D and 3D seismic and was the most competitively bid for field in the bidding round. YD Llanos 8 has a surface area of 1,125 acres. A discovery well in 2011 tested initially at a rate of 2,400 bpd and accumulated 600,000 bbls during the first year of production from the Lower Sand 1 formation. The well is currently shut in due to mechanical problems having produced at a rate of 830 bpd. YD Llanos 2 has a surface of 625 acres. A discovery well drilled in 2011 tested initially at a rate of 600 bpd from the Lower Sand 1 and 3 formations. The well produced for75 days and is currently shut in.
Part of the area covered by these blocks, according to the EIA, could have potential for unconventional production from the Gacheta formation, which constitutes the source rock of the prolific Llanos basin. The 2013 EIA report considers the Gacheta formation as one of the three potential shale source rocks in Colombia, with a thickness of 150 to 300 feet, an organic content of between 1% and 3%, appropriate thermal maturity and over-pressure. Further information is available from www.eia.gov/analysis/studies/worldshalegas/pdf/chaptersiv_vii.pdf
The licenses have a first period of 12 months in which the total work commitment in relation toAndes’s participation is approximately £250,000 for the three licences after which there is an option to continue for a second period of 24 months with a commitment to re-enter an existing well, in each field. However, the re-entering of the wells could be done during the first period and Andes will evaluate this possibility in order to bring these fields into production. The definitive awarding of the fields is expected to occur later this month. The contracts include the right to exploit unconventional hydrocarbons such as shale oil and shale gas. All the information regarding the bid round, conditions, contracts, fiscal regime and field locations can be found at www.rondacolombia2014.com.