Page 14 - LatAmOil Week 16 2020

LatAmOil
NEWS IN BRIEF
LatAmOil
UPSTREAM
Alvopetro announces
authorisations for operation
and commencement of
commissioning
Alvopetro Energy announces the receipt of authorisations for operation of our Caburé Mid- stream Project, commencement of commission- ing and an operational update.
Caburé Midstream Project (100% Alvo- petro): Our Caburé Midstream Project includes an 11-km Transfer Pipeline and a Gas Treatment Facility. Construction of the Transfer Pipeline and Facility has been completed and we have received authorisation from the National Agency of Petroleum, Natural Gas and Biofuels of Brazil (ANP) for commissioning operations of both the Facility and the Transfer Pipeline. Commission- ing activities commenced on April 21, 2020, with first natural gas being delivered from the Caburé Unit to the Facility. Alvopetro expects to have all commissioning work completed in May.
Our natural gas will be sold under our long- term gas sales agreement (GSA) with Bahiagás, the local distribution company for the state of Bahia. As part of this agreement, Bahiagás agreed to extend their distribution network by 15 km and construct a new gas receiving station (City Gate) at the Facility site. Construction of these projects is continuing, and Bahiagás expects to complete their projects in the second quarter of 2020, at which time Alvopetro plans to start natural gas deliveries from the Caburé field. There have been no interruptions to these projects as a result of the COVID-19 pandemic.
Caburé Unit Development (49.1% Alvo- petro): Natural gas for Alvopetro’s midstream project will commence from our Caburé natu- ral gas field (Alvopetro 49.1% working interest). The field has a total of seven wells, with six of these wells tied into recently expanded produc- tion facilities, ready to deliver Alvopetro’s share of natural gas into our Midstream Project and natural gas during the commissioning phase. The Unit has a planned gross production plateau rate of 450,000 cubic metres per day. Depending on our partner’s delivery nominations, we have the ability to produce up to 450,000 cubic metres per day against Alvopetro’s share of reserves from the Caburé Unit.
Deep Basin Gomo Natural Gas Project (100% Alvopetro): On our deep basin Gomo natural gas project, we completed the stimula- tion and initial production test of our 183(1) well in January. For this wellbore, we completed and stimulated 13 metres of net pay and have over 26 metres of total potential net pay in this Gomo
sequence in the wellbore. The pressure record- ers were recovered from the wellbore and we have now completed pressure transient analysis. Results from the pressure transient analysis indi- cate a one-year recoverable volume of 140 mcf (3.965 mcm) gas and 4.7mn barrels condensate, and a one-year average rate of 400,000 cubic feet (11,330 cubic metres) per day gas and 13 bar- rels per day condensate. Unfortunately, during the formation test we were unable to recover all the load and fracking fluid due to operational challenges. Since there were substantial liquids in the wellbore and fractures, we were unable to verify the full expected influence of the fracture stimulation with the pressure transient analysis. Alvopetro has applied for an extension to the existing phase deadline for this block to install a plunger lift system to evacuate the remaining completion and stimulation fluid in the wellbore and put the well on a 60-day, long duration test to obtain improved estimates of its full potential while working through the permitting process for the pipeline extension to tie the well into the Caburé infrastructure. We are also pursing the design of a “fit for purpose” Gomo development well that can optimally exploit the vertical extent of the reservoir with a multistage hydraulic stimulation.
Alvopetro Energy’s vision is to become a leading independent upstream and midstream operator in Brazil. Our strategy is to unlock the on-shore natural gas potential in the state of Bahia in Brazil, building off the development of our Caburé natural gas field and the construc- tion of strategic midstream infrastructure. Alvopetro, April 22 2020
Peru: PetroTal completes
third horizontal well at
the Bretana oilfield
PetroTal has provided an update on its oper- ations and production at the Bretana oil field in Block 95 in Peru (100% working interest), together with a wider Company financing update. All monetary amounts in this release are in United States dollars.
Highlights: The BN 95-6H horizontal well (6H) came online on April 10, 2020 and is cur- rently producing approximately 5,750 barrels of oil per day (bpd), in line with management’s expectations. During these ten days the well has achieved average production of approximately 4,500 bpd. The 6H well was completed on time and under the original $12.6mn budget. The 6H well reached a lateral length of 1,178 metres and has been completed using autonomous inflow control device (‘AICD’) valves that restrict water inflow, to help maximise oil production. The Bretana oil field reached new record quarterly production of approximately 9,688 bpd and sales of 9,937 bpd during the first quarter of 2020. Completed commissioning of the enhanced cen- tral production facilities (CPF-1), bring overall oil production capacity to between 16,000 bpd and 18,000 bpd.
In order to preserve liquidity, the Company will postpone drilling the water disposal well that was scheduled to spud after 6H and, based on the enhanced CPF-1 production capacity, also delay completion of the CPF-2 facilities, reducing the Company’s overall 2020 capital expenditure budget by 33% to $66mn.
In light of global market uncertainty, and to further conserve cash, the Company will post- pone drilling the BN 95-7H horizontal well until at least July 2020, instead of the previously announced mid-May spud date. As of March 31, 2020, the Company has $7.3mn of cash on hand, which is prior to receipt of approximately $7.5mn, from net proceeds of March oil sales.
Further Information: PetroTal has success- fully completed the 6H well, the Company’s third horizontal well in the Bretana oil field, which is currently producing 5,750 bpd, in line with management’s expectations. The well reached the target Vivian formation at a vertical depth of 2,698 metres. The 1,178-metre horizontal section inside the main productive oil reservoir makes the 6H well the longest horizontal well drilled to date in Peru. Based on the success in the BN 95-4H (4H) and BN 95-5H (5H) wells, the 6H well completion utilises additional AICD valves to maximise oil production. The 6H well was drilled to the west of 5H, slightly downdip of the crest of the structure, at a similar depth to the 4H. The well cost was approximately $12.5mn, under budget by approximately $150,000.
The Company has postponed drilling the second water disposal well, and now expects to spud the next oil well in July 2020, at the earliest, with the drill rig now on standby status at negoti- ated reduced rates. Decisions on additional 2020 capital activity, including drilling additional oil wells, will be made in due course. PetroTal will look to preserve capital by deferring certain pro- jects, such as drilling the previously mentioned water disposal well and finalising the CPF-2, as required.
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Week 16 23•April•2020