TIDMAEN
RNS Number : 8439G
Andes Energia PLC
09 March 2015
9 March 2015
Andes Energia plc
("Andes" or "the Company")
Fracking and Test result of Vaca Muerta "Las Varillas x-1"
well
The Board of Andes (AIM: AEN; BCBA: AEN), is pleased to announce
the results of a multi stage fracture and production test on the
"Las Varillas x-1" well which was drilled in the first half of 2014
and has recently been fracture stimulated, on the "El Manzano West"
block in the Neuquen basin, Mendoza Province, Argentina.
Highlights:
-- The Las Varillas x-1, which in 2014 was drilled and cased to
a total depth of 7,851 feet (2,393 metres) and encountered 410 feet
(125 metres) of gross pay in the unconventional Vaca Muerta
formation, has been stimulated with a three stage vertical
hydraulic fracture and tested in early 2015.
-- After the clean-up of the well and during the initial 48 hour
testing period, the well produced through a five inch casing on
managed choke sizes (4-16mm) an average rate of 90 bbl/d of 23deg
API crude oil under natural flow, and following the installation of
an artificial lift system the well flowed at an increased rate of
108 bbl/d. The well currently continues in production and a series
of mechanical works are being carried out in order to increase
productivity.
-- Las Varillas x-1 well is the fourth successful well targeting
the unconventional Vaca Muerta formation in Andes's portfolio,
which together with the VG-1 well de-risk the northern extension of
the basin, where Andes has 210,000 net acres from a total of
250,000 net acres in the entire basin.
-- The well was drilled, fracked and tested in a joint venture
with YPF (operator), in which Andes has a 40% participation in the
production and reserves coming from the Vaca Muerta formation.
Andes was fully carried through the drilling, fracturing and
testing of the well.
Nicolas Mallo Huergo, Chairman of the Company, commented:
"We are very encouraged with the results of Las Varillas x-1
well, which represents our fourth discovery and test in Vaca Muerta
and our second well currently producing from Vaca Muerta, as well
as with the consistency of the positive results in all the wells we
have drilled across the basin. We believe the future for the
development of our acreage in Vaca Muerta is extremely
positive."
Summary
Completion and testing operations were conducted by YPF SA as
part of a farm-in agreement in which Andes has a 100% working
interest in all production from the Agrio formation and a 40%
carried interest in production from the other formations, including
Vaca Muerta.
As previously announced, the vertical well "Las Varillas x-1"
was drilled and cased in February 2014 to a total depth of 7,851
feet (2,393 metres) and encountered 410 feet (125 metres) of gross
pay in the unconventional Vaca Muerta formation. A comprehensive
analysis of the core sample and electrical logs was performed,
defining a prospective zone of 113 metres to be perforated in the
Vaca Muerta formation.
The fracturing was designed during 2014 and it was adapted to
the fluid and petrophysical properties encountered in the core
samples taken during the drilling and subsequently analysed.
The completion operations were conducted on the vertical well
involving three clusters of perforation and a multi-stage hydraulic
stimulation of three stages with a total of 9,741 sacks of
proppant.
During a 139 hour clean-up period the well flowed continuously
through a five inch casing on managed choke sizes (4-16mm). In the
last 24 hours of this period the well flowed at an average gross
rate of 350 bbls/d with a water cut of 50%.
After the clean up period was finished, the well flowed at 90
bbls/d of 23deg API crude oil under natural flow. An Artificial
Lift System was installed, and the flow rate increased to a rate of
108 bbls/d of crude oil. Currently, works are being carried out on
the Artificial Lift System order to increase the productivity of
the well.
To date Andes has, since 2012, made four discoveries in the Vaca
Muerta in four of its six licenses in this play (Mata Mora,
Corralera, Vega Grande and El Manzano West).
Supported by the domestic oil price of US$77 bbl in Argentina
(set by the National Government in December 2014), Vaca Muerta
continues to be developed at a good pace, with approximately 44,000
boepd of production from the basin.
For further information please contact:
Andes Energia plc Nicolas Mallo Huergo, Chairman T: +54 11 4110
Alejandro Jotayan, CEO 5150
Billy Clegg, Head of Communications
T: +44 20 3757
4983
Macquarie Capital (Europe) Jon Fitzpatrick T: +44 20 3037
Ltd Fergus Marcroft 2000
Nick Stamp
Westhouse Securities Antonio Bossi T: +44 20 7601
David Coaten 6100
GMP Europe LLP Rob Collins T: +44 20 7647
Emily Morris 2800
Camarco Georgia Mann T: +44 20 3757
4986
Qualified Person Review
In accordance with AIM guidance for mining, oil and gas
companies, Mr. Juan Carlos Esteban has reviewed the information
contained in this announcement. Mr. Juan Carlos Esteban, an Officer
of the Group, is a petroleum engineer with over 20 years of
experience and is a member of the SPE (Society of Petroleum
Engineers).
Reserves Report
Resources reports, certified by Netherland, Sewell &
Associates, Inc., indicate the existence of 320 million of
equivalent oil barrels of resources in the area of 210,000 net
acres in the northern extension of the Neuquen basin. See the
reports on the El Manzano and La Brea blocks at
www.andesenergiaplc.com.ar
Note to Editors:
Andes Energia is an oil and gas company focussed on onshore
South America with a market capitalisation of circa GBP115m. The
Company has its main operations in Argentina and Colombia.
The Company has 26MMbbls of conventional 2P reserves, and it
also has certified prospective resources of 659MMboe, primarily in
the Vaca Muerta unconventional formation in Argentina and 7.5
million acres across South America.
The Company has approximately 2 million net acres in
unconventional plays including 250,000 net acres in the Vaca Muerta
formation, which is the second largest shale oil deposit in the
world and the only producing shale oil deposit outside of the USA.
Over 300 wells have already been drilled and fracked in the Vaca
Muerta formation.
Andes is the only AIM quoted company on the London Stock
Exchange with exposure to the Vaca Muerta formation.
The Company currently produces 3,300 bbls per day in Argentina
and Colombia from 6 conventional fields in Argentina and 2 in
Colombia, with positive cash flows generated. Andes Energia, with
its partner YPF, has 30 wells planned over the next 12 months,
which are fully funded by the field production cash flow.
Considerations on Argentinean oil domestic market and
regulation
Domestic oil prices in the country are not directly linked with
international price movements, and have not been affected by recent
drops in WTI and Brent prices. In December 2014, National and
Provincial States, together with oil producers, refiners and retail
vendors formally agreed to set a price of US$77 per barrel for
crude oil. Argentina used to be a net oil exporter until 2008 with
extensive infrastructure available to transport oil from inland
fields to the Atlantic Ocean coast. In 2014 the country imported
minimal quantities of crude oil for the first time in 20 years, but
in 2015 the supply/demand situation is expected to be balanced. All
big refiners, except one, are also crude producers, and all of them
sell the refined products domestically. Part of the refining
capacity is located inland near oil fields, at more than 1,000 km
from the Atlantic coastline, which implies a substantial transport
cost to process imported crude oil. Additionally, the country is
running with a shortage of foreign currency in the Central Bank
reserves, and companies who want to import must ask for
authorisation from the Central Bank to receive foreign currency to
pay for imports. There is, therefore, an incentive for the State to
promote the consumption of local crude oil instead of authorising
oil imports, even at a higher price than import parity, to avoid a
loss of foreign currency reserves and to incentivise domestic
production, investments, jobs and other activities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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