LGO Announce Operational Update
LGO announced that its latest development well, GY-676, at its Goudron Field development in Trinidad, reached total depth at 3,545 feet measured depth (“MD”) on 19 July 2015. Electric log interpretation from both the Goudron Sandstone and C-sand intervals confirms the presence of recoverable hydrocarbons, with the net hydrocarbon pay in the main C-sand target estimated as 222 feet. The well has been successfully cased for future production.
Well GY-676 is the fifth of the seven 2015 wells and the second well from drilling Pad 5 in the north-east of the field. Net oil pay in the Goudron Sandstone was encountered between 535 and 1,255 feet with an estimated 250 feet of total net pay. The oil bearing C-sand interval was encountered between 1,870 and 3,455 feet MD. Shows of light oil at surface were reported at a depth of 2,077 feet, typical for these wells which are drilled close to pressure balance. Net hydrocarbon bearing pay in the C-sand interval is estimated as 222 feet. These observed net pay zones are fully in line with pre-drill expectations for this well.
The next well in the planned sequence, GY-677, the sixth in the 2015 program, and the fourteenth in the field redevelopment program has now been spudded and drilled and cased to the first casing point at 355 feet MD.
Second Quarter Production
Group oil production averaged 951 bopd during the second quarter 2015. This includes managed natural depletion from the new wells drilled last year on Pads 1, 2 and 3 at Goudron. This figure does not reflect production from Goudron Pad 4 since wells GY-672, GY-673 and GY-674, were drilled during the second quarter and only brought on line at the end of the period. Operations continue to optimise production from those new Pad 4 wells and a further update on that will be issued in due course. Once all seven 2015 wells have been completed the Company will be able to update production guidance.
Future Goudron Drilling Plans
Well Services Rig 70 has been moved to the next cellar on Pad 5 and it has spudded the sixth well of the 2015 program, GY-677, which is planned to be drilled to a total depth of 3,286 feet MD (3,000 feet TVDss) at a location 540 feet south-west of the surface location. Well GY-677 is once again targeting a C-sand reservoir interval.
The final well in the 2015 C-sand program, well GY-678, will be drilled from Pad 3 and will target an area which is similar to the very successful well GY-670 which was flowed at rates above 1,000 barrels of oil per day in late 2014. Further drilling on Pad 5 is planned for at a later date. Well GY-678 will be designated a “data well” with additional tests including the cutting of a 30-foot core in the C-sand. This additional data is key to the planned enhanced oil recovery (“EOR”) project for which we are planning a pilot project which we anticipate commencing in 2016.
A program of shallow Goudron Sandstone wells, which can be drilled using a smaller drilling rig, is now being worked-up with plans to commence that work later in the year. A rig has been identified and it is being brought up to necessary specifications for this work. Sites are being selected for the drilling of simple low cost vertical wells to depths up to 1,700 feet in order to exploit the Goudron Sandstone. The thirteen wells drilled in our 2014 and 2015 campaigns have so far exhibited an average of 288 feet of net oil pay in the Goudron Sandstone. Site preparation can be scaled back considerably with the use of the small footprint rig, and locations can therefore be sited close to Goudron Sandstone targets across the field.
As previously announced, the recent independent reserves assessment by LR Senergy identified between 170 and 343 million barrels of Proved and Probable oil in place in the Goudron Sandstone. This new drilling work is intended to start to convert a portion of that to producing reserves and broaden the production base. To accommodate the expanded drilling program, we have made the necessary applications for the current 30 well environmental approvals to be increased to 60 wells.
Fergus Jenkins, LGO’s Chief Operating Officer, commented:
“Our C-sand drilling program at Goudron continues to progress very well and we are now on our sixth new well in 2015. Drilling times and costs have been markedly reduced from 2014 and we have been collecting valuable data to plan the future development of the field, including the EOR project which has exciting potential. Goudron continues to operate in a very efficient fashion with low historical operating costs of less than $10 per barrel which is beneficial in the low oil price environment in which we continue to have to operate.”
Steve Horton, LGO’s Chairman, commented:
“The Company has a sound investment case for the long-term development of its portfolio in Spain and Trinidad. The Goudron asset in Trinidad, with its low operating cost, is especially robust to low oil prices and we are confident of the Company’s underlying value.”
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