Alvopetro announces discovery of hydrocarbons on Block 183 in the Reconcavo Basin, Brazil

Oct 10, 2014 12:00 AM

Alvopetro Energy has provided an operational update, highlighted by its discovery of hydrocarbons on Block 183, with over 189 metres of potential net hydrocarbon pay in the 183(1) well. The 183(1) well is located on Block 183 in the Recôncavo Basin, in the State of Bahia, Brazil.

Alvopetro stated: Our initial objective with our first two-well drilling program was to prove the resource potential of the Gomo Member of the Candeias Formation. We have now drilled two highly successful wells, achieving significant milestones towards our objective. We have proven hydrocarbon deliverability on an unstimulated basis, at depth, in the core of our play fairway and added considerable deep basin natural gas potential to our originally defined oil resource opportunities. In addition, we have reprocessed all available 3D seismic over our land base and have started to build an extensive inventory of conventional opportunities.

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183(1) Well Discovery

Our 183(1) well, which reached a total depth of 3,550 metres, has been logged, and will be cased and tested. During the drilling of the 183(1) well we completed two core runs, recovering over 40 metres of core, with 100% core recovery. We are undertaking extensive special core analysis, expected to be completed within six months. Based on open-hole logs, the 183(1) well encountered 189 metres of potential net hydrocarbon pay over several separate intervals, using an 8% porosity cut-off for indicated oil zones and a 4% porosity cut-off for indicated natural gas zones. Our initial petro-physical analysis indicates three key potential hydrocarbon intervals.

Based on logs, we have identified an upper zone of our 183(1) discovery well consisting of a thick continuous column of sand with 46 metres of net pay, using an 8% porosity cut-off, with porosity ranging between 8% and 11%, averaging 10%. This represents approximately 57 million barrels of undiscovered petroleum initially-in-place ('UPIIP') per square mile, comparing very favourably to other resource plays.

In addition, we were pleased to discover a three metre zone with 14% porosity, which is stratigraphically distinct from the upper zone tested in our 197(1) well. This zone has a log resistivity of 40 ohms, compared to the resistivity of 20 ohms measured in the uppermost test zone in our 197(1) well.

Logs from our 183(1) well also indicate a natural gas zone with 93 metres of net pay, using a 4% porosity cut-off, with porosity ranging between 4% and 11%, averaging 7%. Using 3D seismic we have mapped this zone to be part of the same geobody as the natural gas discovery in the lowermost zone tested in our 197(1) well. Based on logs and our mapping we internally estimate 3.8 TCF of total petroleum initially-in-place ("TPIIP") (natural gas, mid-point) at reservoir conditions (620 million boe) in this geobody, with an aerial extent of approximately 5,460 acres.

Additional technical work and testing is required to determine the extent, if any, of potential commercial hydrocarbons associated with the 183(1) well. We plan to commence a multi-zone testing program on the 183(1) well with a service rig, subject to our overall drilling schedule and following receipt of required regulatory approvals. Based on the results of our mud-logging and open-hole logs, we will file a Notice of Discovery relating to our 183(1) well with the National Agency of Petroleum, Natural Gas and Biofuels ('ANP').

Operational Update

Our 197(1) well was drilled to a total depth of 3,275 metres, encountering 43 metres of potential net hydrocarbon pay over several separate intervals, with an average porosity of 9.5 percent, using an 8 percent porosity cut-off.

Below 3,000 metres measured depth, the 197(1) well encountered 16 metres of net pay within various sands. The lowermost 6 metres of net pay was perforated and flowed natural gas, without stimulation, at a rate of 40 mmcf/d, with no water. The test data characterizes the resource as liquids rich, high-heat content, gas in an unconventional reservoir and, as expected, will require the application of modern reservoir enhancement techniques. We plan to model, procure equipment, and make application for a reservoir enhancement program, which will define the ultimate deliverability of this zone. This interval is part of a large geobody that we have mapped using 3D seismic over a large area, which has now been confirmed by our 183(1) well result.

The third zone in our 197(1) well, currently being tested, has encountered primarily water. Additional reservoir data is being collected to calibrate our petrophysics.

Conventional Exploration Inventory

We have merged and reprocessed all available 3D seismic over our land base which has provided us with an enhanced understanding of our Gomo Resource potential and has expanded our inventory of conventional prospects. We now have nine conventional prospects with an internally estimated mid-point TPIIP of 250 million boe.

Capital Program

Following the 183(1) well, we plan to commence drilling our 197(2) location on Block 197, which is a shallow conventional exploration target offsetting an existing gas discovery. In 2015, we plan to drill a series of conventional exploration prospects, and commence drilling on our Bom Lugar mature field which together will complement our ongoing work on the Gomo resource play.

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