CALGARY, ALBERTA--(Marketwire - Oct. 11, 2012) - C&C Energia Ltd. ("C&C" or the "Corporation") (CZE.TO) is pleased to provide an operational update on its operations in Colombia.
The Corporation drilled 4 exploration wells during the second quarter, continuing to add to its reserves base and production capacity for future growth.
Production rates for the third quarter 2012 and year-to-date 2012 were approximately 11,400 barrels of oil per day ("bopd") and 10,770 bopd respectively. Current production levels are approximately 11,000 bopd. Year-to-date average production of approximately 10,770 bopd represents a year-on-year increase of 39% versus 7,768 bopd for the same period of 2011.
During the quarter, the Corporation signed additional sales agreements with third parties, which facilitated a reduction in crude oil inventories of approximately 206,000 barrels to approximately 197,000 barrels as at September 30, 2012. The Corporation continues to work to further reduce crude inventory levels.
On the Cravoviejo block (100% working interest), the Corporation drilled a successful exploration well on the Heredia field. Heredia-2 is a follow-on exploration well to the 2011 Heredia-1 discovery. The well was drilled to 9,938 feet and is currently being completed in the C5 and Gacheta Formations following MDT testing. The Gacheta Formation tested under natural flow at 415 bopd at a 2% water cut over a 4 day testing interval. The C5 Formation is currently being completed and long-term testing on the two zones will conclude in October and approval for permanent production is expected to follow in November.
The Saimiri-1 exploration well, which was drilled and cased to 10,267 feet during the second quarter of 2012 has been followed up with a step out exploration well, Saimiri-2. The Saimiri-2 well reached a TD of 9,306 feet and the Corporation is currently completing a MDT testing program. Pending MDT test results, the wellbore will be prepared to run production casing with production testing expected to commence in October and results expected in November.
Earlier announced discoveries continue to add to the Corporation's production base. The Zopilote field continues to produce at over 4,000 bopd from seven wells with an average water cut of 48%. Approximately 2,600 bopd of 32 degrees API oil is being produced from the C5 Formation and over 1,400 bopd of 18 degrees API oil is being produced from the Gacheta Formation.
The Corporation plans to drill four additional wells on the Cravoviejo block prior to year-end, including a development well at Carrizales-20 targeting the Ubaque Formation, an injection well (Carrizales-21) in support of the ongoing Gacheta waterflood program, and up to one appraisal well on each of the Saimiri and Heredia discoveries.
On the Cachicamo block (100% working interest), C&C drilled three exploration wells and completed the extended testing of the Greta Oto-1 discovery well during the third quarter. The Guacharios-1 exploration well was drilled between existing producing fields at Andarrios and Guacharaca to a depth of approximately 7,787 feet. The well was logged, cased and tested approximately 430 bopd of 28 degrees API oil from the Gacheta Formation with a 5% water cut. The Corporation has received approval to place the well on permanent production. The Greta Oto-1 discovery was drilled to a total depth of 8,670 feet and encountered 10 feet of pay in the C5 formation. Greta Oto-1 was perforated and had sustained production rates of approximately 500 bopd of 26 degrees API oil. It is estimated that the well will be placed on permanent production in late October. As C&C announced on August 13, 2012, the Monarca-1 and Maquito-1 exploration wells on the Cachicamo block were plugged and abandoned. Drill and abandonment costs were approximately US$1.5 million for each of these wells.
On the Llanos-19 block (100% working interest), the previously announced Tormento-1 well was drilled to a total measured depth of 15,166 feet and has been completed successfully in the Gacheta and Mirador Formations. C&C recently completed an extended volumetric pressure test on the Mirador Formation and is currently preparing the well for an extended production test from the Gacheta Formation. Results of the two test programs will be finalized by the end of year 2012 and, pending analysis, a follow-up appraisal location will be selected. It is anticipated that the drilling of Tormento-2 will occur in the first quarter of 2013.
"We are very pleased with the results from our 2012 drilling program in the Llanos basin" said Randy McLeod, President and CEO. "We continue to cost effectively exploit our producing fields while at the same time extending the life of our Cravoviejo and Cachicamo blocks with new discoveries, adding to our current production and reserves base to underpin future growth."
C&C recently received the required environmental permits to move forward with the drilling of the Coati-1 well on the Coati block (100% working interest) in the Putumayo basin. The Corporation, together with its partner Canacol Energy Ltd. ("Canacol"), has commenced civil works on the block, including upgrading of roads and bridges, to facilitate the drilling of Coati-1 in late first quarter 2013. Upon Canacol's meeting its obligations to pay 80% of the cost associated with acquiring seismic and drilling one exploration well, it will earn a 40% working interest in the Coati Block and the Corporation's working interest will be reduced from 100% to 60%.
The Corporation and its partner VETRA Exploration and Production Colombia S.A. have completed acquisition of a 95 km2 3D seismic survey on the Putumayo-8 block (50% working interest). The data has been provided to a third party for processing, which is expected to be completed later in the fourth quarter 2012. An exploratory well is planned on this block for late in 2013, pending seismic processing results and receipt of drilling permits. The Putumayo-8 block is immediately adjacent to the Platanillo field, with a recently announced significant oil discovery. C&C is targeting the same pay horizons on an analogous play concept on its block less than 3 kilometers from the Platanillo discovery.
ABOUT C&C ENERGIA LTD.
The Corporation is engaged in the exploration for and the development and production of oil resources in Colombia. Its strategy is to develop producing oil assets by appraising and developing existing discoveries and exploring in areas assessed by management to be of moderate risk. With a total of eight blocks (seven operated) and approximately 597,000 acres (478,000 net acres) in Colombia, the Corporation's management expects that C&C has considerable upside for future production and reserve growth.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release contains forward-looking information within the meaning of applicable Canadian securities laws that involves known and unknown risks and uncertainties. Forward-looking information typically contains statements with words such as "anticipate", "estimate", "expect", "potential", "could", "will", "plans" or similar words suggesting future outcomes. The Corporation cautions readers and prospective investors in the Corporation's securities to not place undue reliance on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by C&C.
Forward-looking information in this press release includes, but is not limited to, information concerning the expectations of the Corporation with respect to the Corporation's future production for the third quarter of 2012 and for 2012 as a whole and the Corporation's drilling plans in each of the Cravoviejo, Cachicamo, Llanos-19, Coati and Putumayo-8 blocks, expectations regarding future reductions of inventory levels and expectations regarding the timing of drilling results and receipt of approvals for certain of its wells. These forward-looking statements are subject to assumptions regarding the Corporation's operations and the operating environment in Colombia. In particular, estimates of production for the third quarter of 2012 and for 2012 as a whole, estimates of inventory levels, drilling plans and expectations regarding the timing of drilling results and regulatory approvals are based on the assumptions that the Corporation's plans will be completed without any undue difficulty, that costs will not rise significantly and that events will not cause disruptions in the delivery of the Corporation's oil production to market. The Corporation's capital program and drilling are subject to change if circumstances change or if management of the Corporation determines that other business plans are more appropriate.
Forward-looking information involves significant known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those anticipated by C&C including, but not limited to, general risks associated with the oil and gas industry (e.g. operational risks in exploration; inherent uncertainties in interpreting geological data; changes in plans with respect to exploration or capital expenditures; the uncertainty of estimates and projections in relation to costs and expenses and health, safety and environmental risks, potential risks arising from trucking and other delivery disruptions), the risk of commodity price and foreign exchange rate fluctuations, the uncertainty associated with the negotiating with the ANH or with other third parties in countries other than Canada and the risk associated with international activity. The forward-looking information included in this news release is expressly qualified in its entirety by this cautionary statement. The forward-looking information included herein is made as of the date hereof and C&C assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.