FIELD ACTIVITIES / PacAlta Updates Drilling Results
PACALTA RESOURCES LTD. UPDATES EXPLORATION RESULTS
CALGARY, June 22 /CNW/ -
CITY BLOCK EXPLORATION
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Pacalta Resources Ltd.'s 100 % owned Ecuadorian subsidiary, City
Investing Company Limited has recently commenced production testing on its new
pool wildcat discovery well, Mariann 4A. The Mariann 4A well was rig-released
on April 15, 1998 and testing commenced on June 6, 1998. The well encountered
a total of five potentially productive sands, in three different geological
formations, which are being tested consecutively. The first of these zones,
the Upper ''T'' sandstone, tested at a final rate of 2,226 BOPD of 31 degree
API oil. The next test, over a separate Upper ''T'' sandstone interval,
yielded 1,377 BOPD of 31 degree API oil. The Company is proceeding with its
program to continue testing the Lower ''U''' sand, the Middle ''U'' sand and
the ''M-1'' sand. Based on this light oil discovery, the Company is
investigating options to accelerate development of this pool with the
intention of adding to the total light oil productive capability of Ecuador,
which is currently declining. In addition, this light oil stream may be able
to access currently underutilized capacity on the Colombian Trans-Andean
Pipeline (OTA). Additional light oil production available to the
Trans-Ecuadorian Pipeline (SOTE) may also incrementally increase the total
system capacity by reducing overall viscosity and enhancing the average API
gravity.
BLOCK 27 EXPLORATION
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Pacalta's other 100 % owned Ecuadorian subsidiary, City Oriente Ltd., has
completed the drilling of the first exploratory well on the 494,000-acre Block
27. This new field wildcat well, Tipishca 1, was cased on May 30, 1998.
Completion and testing operations for a total of six potentially productive
zones in four different geological formations have recently commenced. The
first zone tested was the Upper ''T'' zone, which tested at a final rate of
1,677 BOPD of 32 degree API oil. The second zone tested in this well, the
''B'' Limestone, did not yield commercial results. The well was then tested
in the Lower ''U'' sandstone at a final rate of 2,322 BOPD of 30 degree API
oil. The remainder of the testing program will evaluate a second interval in
the Lower ''U'', the Upper ''U'', and ''M-2'' sandstones. Based on these
preliminary results, the, Company is proceeding with the drilling of the
exploratory well Patricia 1 (formerly Tipishca 2) from the same drilling pad.
The Company is conducting a 3D seismic program on the Block and the layout of
this program has been realigned to cover the Tipishca discovery to identify
potential follow-up locations. The Company is also investigating various
methods to bring this discovery on-stream as soon as possible which could
result in initial production from Block 27 prior to the conclusion of the
exploratory period of the contract. Once again, this light oil discovery may
be able to access underutilized capacity on the OTA.
OPERATIONS UPDATE
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The Company is currently producing at a restricted rate of 17,597 BOPD
from the City Block. The Dorine field development plan has been approved by
the Energy Minister and the Company is waiting for new allocations into the
SOTE and OTA to be fixed by the National Hydrocarbons Directorate. It is
expected that these new allocations will result in a material increase in
total oil production for the Company. This anticipated increase, however,
will not include allowables for the two new pool discoveries mentioned above,
or the now Dorine 8 development well, which is currently testing at 3,840
BOPD. In addition, the Company is awaiting new allowables for three new wells
drilled on the Fanny 20 pad. When allowables have been set for these
additional wells, the Company anticipates a further increase in SOTE/OTA
pipeline allocation. However, there can be no assurance that the Company will
be awarded increased allocations into the SOTE or OTA. Concurrent with the
increase in allocations, the Company also anticipates an overall increase in
SOTE capacity of between 10,000 and 25,000 BOPD as a result of a minor
expansion that has recently been completed.
The ultimate production from all the Company's wells in Ecuador will be
prorated to reflect the restricted export capacity available on the SOTE/OTA
pipeline system.
Several statements in this press release, including statements regarding
anticipated oil and gas production and other oil and gas operating activities,
are forward looking. These statements are identified by the use of
forward-looking words and phrases, such as: ''potentially''; ''intention of
adding''; ''may also incrementally increase''; ''will result''; ''which could
result''; ''anticipates''; ''anticipated''; ''may be able''; and ''expected''.
These forward-looking statements are based on the company's current
expectations. Because forward-looking statements involve risks and
uncertainties, the company's actual results could differ materially. Among
the factors that could cause results to differ materially from current
expectations are: (i) the general political, economic and competitive
conditions in markets and countries where the company and its subsidiaries
operate, including risks associated with changes in energy policies, currency
fluctuations and general operations in foreign countries; (ii) changes in the
company's and its subsidiaries' access to the pipeline capacity, which is
controlled by government agencies in the regions where the company and its
subsidiaries operate, and pipeline disruptions and capacity constraints; (iii)
fluctuations in the prices of oil and natural gas; (iv) inherent uncertainties
in the interpretation of engineering and geologic data; (v) operating hazards
and drilling risks; and (vi) the timing and occurrence (or non-occurrence) of
transactions and events which may be subject to circumstances beyond the
company's control.
Pacalta is an international oil and gas exploration, development and
production company with common shares trading on The Toronto Stock Exchange
under the symbol PAZ and on the NASDAQ under the symbol PAZZF.
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For further information: John D. Wright, President & CEO or M. Bruce
Chernoff, Executive Vice President, (403) 266-0085
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