Petrominerales begins production from Colombian well

Petrominerales, a 67 % owned subsidiary of Petrobank Energy and Resources, has announced that the Candelilla-1 well commenced production at over 11,500 barrels of oil per day of 44 degree API oil with less than 1 % water cut using an electric submersible pump (ESP).
Currently the ESP has been taken offline and the well is free-flowing naturally at 7,400 boepd with less than 0.1 % water cut through a half inch choke. The well is being produced through temporary well-site facilities that have a capacity of 10,000 barrels of fluid per day (bfpd). Production has been temporarily restricted due oil transport limitations over the recent holiday period.

The well will be produced through the temporary facilities while we await approval from the Ministry of Environment to tie into the Corcel Central Processing Facility, expected in the second quarter of 2010. This successful production test is from 10 feet of perforations at the top of the Lower Sand 3 formation, which was initially identified as theLower Sand 2 formation after the preliminary analysis of the well logs.
The Candelilla-1 is the second exploration well on the Guatiquia Block, which is on trend and contiguous with the southwest portion of the Corcel Block in the Llanos Basin. The Candelilla-1 commenced drilling on November 9, 2009 and was drilled to a total vertical depth of 11,681 feet on December 16, 2009.

Well logs indicated 97 feet of potential net oil pay in the Lower Sand 3 formation (previously identified as Lower Sand 2) and 13 feet of potential net oil pay in the Upper Mirador. The company is planning to evaluate additional pay intervals at a later date.
The Candelilla-2 well commenced drilling on December 26, 2009 and is currently drilling at a depth of 8,300 feet. The company expects to complete drilling operations by the end of January. Following the results of Candelilla-2, it may re-align our program to leave the rig in the area to drill additional follow-up locations into the Candelilla structure.

Percheron-1update
The Petrominerales Percheron-1 well, the first exploration well on the Guatiquia Block, commenced drilling on September 30, 2009 and reached a total vertical depth of 12,196 feet on October 27, 2009. Well logs indicated potential net oil pay of 4 feet in the Guadalupe formation, 51 feet in the Lower Sand 1 and 25 feet in the Lower Sand 3.
As was previously announced the upper portion of the Lower Sand 1 was tested with an electric submersible pump and produced 281 boepd of 11 degree API oil at a 93 % water-cut.

The lower portion of the Lower Sand 1 was swab-tested and resulted in 11 boepd of 12 degree API oil at 98 % water cut. Testing of the Lower Sand 3 zones did not yield commercial hydrocarbons.
Petrominerales recently completed the Guadalupe zone and perforated four feet of oil pay and ran an ESP to test the zone. The company have been producing the well intermittently at rates between 1,500 and 2,000 bfpd, at water cuts varying between 50 and 100 %, but we have had difficultiesmaintaining stable production rates. Later, the company plans to run a more appropriately sized ESP to further evaluate the potential of this zone.

Total company production for the fourth quarter of 2009 averaged 24,557 boepd, a 60 % increase over the fourth quarter of 2008 and a 14 % increase over the third quarter of 2009. Drilling successes at Corcel, Mapache and Neiva have fuelled this growth in 2009.
Petrominerales Ltd. is a Latin America-based exploration and production company producing oil in Colombia with 14 exploration blocks covering a total of 1.8 mm acres in the Llanos and Putumayo Basins and 2.6 mm gross acres in the Ucayali Basin of Peru.