energy-pedia general news
Colombia/Peru: Gold Oil issues half-yearly report and updates operations in Peru and Colombia
31 Jan 2011
Gold Oil the AIM-listed oil and gas exploration and production company primarily focused on opportunities in Latin America has announced its unaudited interim financial information results for the six months ended 31 October 2010.
- Secured additional funding through the injection of £1.1 million by Sheer Energy with a further funding of £1.0 million provided on 30 November 2010. Total funding provided by Sheer to date is £4.07m.
- Appointed a new management team and Board, and agreed service agreements with Australian Drilling Associates and Sheer Energy to provide technical resources;
- The successful farm out of Block XXI in Peru and the Rosa Blanca Block in Colombia;
- Commenced workover operations on three Burdine wells;
- Continued discussions with third parties regarding the farmout of Block Z34 in Peru.
- Loss on Ordinary Activities After Tax £806k (2009 Profit : £62k)
- Loss Per Share 0.14p (2009 profit 0.01p)
During the period under review the Company underwent significant change; additional investment funds were secured through Sheer Energy, a new management team was engaged and the Board was significantly enhanced. I believe that this has provided a sound basis for moving the Company forward and to expand its current operations.
The Company's strategy is focused in the short term on getting the current asset base in good order and then utilising the knowledge and experience the company now has to build a profitable oil and gas business. The Company intends to focus initially on Peru and Colombia and build its presence in those areas, but does not exclude expanding into new areas (such as the Caribbean) as opportunities present themselves.
As part of this strategy the Company will seek new partners for its exploration assets and look to expand its exposure to development opportunities and producing assets through acquisition and licence award.
Chief Executive's Statement
The Company has made considerable progress over the last six months across all its assets in both Colombia and Peru. In the short term the focus has been on farming out our exploration blocks and preparing a programme to increase production from the Nancy Burdine Maxine fields in order to provide additional cashflow into the Company.
Block Z34 Offshore
The processing of 2,013 km of 2D seismic in our offshore Block Z34 was completed in 2010 and interpretation has been ongoing. The current interpretation of the data shows that the block clearly has significant potential.
Currently the main aim of the Company is to secure a competent and financially capable partner take equity in the Block and fund a significant portion of the ongoing exploration work programme. Given the large area of the licence and the deep water over much of the block, the ultimate commitments could be significant and as such the Company is looking at a phased approach to exploring the block adequately. We have opened a data room and made presentations to selected companies and at present are awaiting proposals from interested parties.
Based on the initial interpretation of the seismic data, in August 2009 we filed for an extension of the EIA permit in order to extend the existing 2D permit to give us authorisation to carry out a 3D survey. As the extension has not yet been approved we sought, and were granted, the temporary suspension of the commitments on the Block due to Force Majeure. This allows the company additional time to meet its obligations under the contract due to the delay in obtaining EIA approvals.
Block Z34 covers 371,339 hectares and is bordered to the East by Block Z2B, which is producing both oil and gas and is operated by Savia Peru
Block XXI Onshore:
The Company has signed a farm out agreement with Vale, the Brazilian mining company, to take 70% equity in the block in return for a consideration in cash of $2million and a commitment to fund a further exploration/appraisal programme up to a cap of $10million.
The Company has applied to PeruPetro to combine the current and next phase of the contract work programme. If approved this would make the minimum work programme 400km of 2D seismic or equivalent.
Block XXI covers 303,000 hectares and is bordered by Olympic Oil and Gas' producing gas field on Block XIII.
On the Azar Block an additional 72 km(2) of 3D seismic was acquired over the La Florida structure, located in the Northern part of the Block, and this data is currently being interpreted. Based on earlier seismic two prospects have been identified; La Vega Sur and Este. Both prospects have confirmed drilling locations and are similar geological structures.
Following an application to ANH to take account of the additional 3D survey as fulfilment of the current phase work obligation, there is now no commitment to drill a well on the block by mid February as was previously the case. This allows extra time to evaluate in detail the latest 3D survey acquired and to ensure the best location is picked for the next well. This has led to a delay in drilling on the block but we believe will lead to a more informed, and hence de-risked, drilling decision.
Gold has a 20% working interest in the Azar Block. Azar is located to the northeast of the Company's existing Nancy, Burdine and Maxine oil fields and is operated by Gran Tierra who have considerable experience in the prolific Putumayo basin in southern Colombia.
Nancy Burdine Maxine Fields:
The Nancy-1 well continues to produce at a rate of 250-350 bopd with zero watercut. The crude is produced by artificial means using a downhole jet pump which provides for simplicity of operation in a relatively remote area. However, the well suffers from sand influx into the well bore which impacts on the efficiency of the pump system leading to fluctuating production levels.
A workover programme on the Burdine field commenced in January 2011 with the intention of re entering three wells, Burdine -1, -4, and -5. Burdine -1 and -5 will be completed as oil producers and Burdine -4 as a water disposal well. The workovers entail replacing the existing tubing, completions and down hole equipment, isolating water producing zones where possible and re perforating existing sands where appropriate.
We believe the workovers should add between 200 and 400 bopd to production from the fields. Surface facilities are in the process of being procured, installed and commissioned and should be in place by end Q1 2011.
The Company farmed out its interest in the Rosa Blanca Block to Montecz late 2010. Gold has retained 25% interest in the block and is carried on the Rosa Blanca - 2 well up to a cap of $2 million.
The well was spudded on 10 January 2011 and drilled to a depth of 2,883 feet. During drilling oil and gas shows were encountered in the Rosa Blanca and Tablazo formations. However, on test, the Rosa Blanca formation failed to flow and the Tablazo flowed formation water only.
The Rosa Blanca Block covers an area of approx. 45,000 hectares. It is located in the Middle Magdalena Valley and is surrounded by the nearby oil producing fields of Cristalina, Santa Lucia, Tisquirania, Totumal, Baturama and the South Bolivar Block.
The unaudited financial results for the six months to 31st October 2010 record an operating loss of £790,000 (31st October 2009 loss of £11,000). The loss per share was (0.14p) (31st October 2009 profit 0.01p). No dividend is being declared.
The company has made very rapid progress across all its assets over the last six months and I am confident that the portfolio of assets that we have remains an attractive proposition. We continue to work hard to farm out Block Z34 and to consider all ways to optimise this important asset. We have concluded farm out arrangements with partners on Rosa Blanca and Block XXI and look forward to exploring these blocks in the near term. The Azar Block is still very prospective and delaying the commitment to drill to allow more time to evaluate the prospectivity of the block properly is the correct technical and commercial decision. The commencement of the workovers on the Burdine fields is an exciting step forward and has the potential to increase the production of the Company substantially in the short term.
Source: Gold Oil