TIDMAEN
RNS Number : 7895M
Andes Energia PLC
25 January 2016
25 January 2016
Andes Energia plc
("Andes" or "the Company")
Chachahuen Operational Update
The Board of Andes (AIM: AEN; BCBA: AEN), the producer and
explorer in Argentina and Colombia, is pleased to provide an update
on current production, development and exploration operations in
the Chachahuen block in the Province of Mendoza, Argentina based on
the December 2015 sales and production reports, provided by YPF,
the operator of this block.
Highlights:
-- 26 new successful development wells drilled since the end of
June 2015 increasing production by approximately 1,469 bpd (293 bpd
net to Andes)
-- 97 wells now on stream producing approximately 5,989pd (1,197 bpd net to Andes)
-- Ongoing water flood project has increased the average rate of
injection from 1,800 bpd to 3,600 bpd through 17 injection wells
increasing the recovery rate
-- Acquisition of 552 km(2) of 3D seismic and 267 km of 2D seismic
-- Commencement of low cost LaOrx-1 exploration well
-- Commencement of low cost CeMox-1 exploration well
-- Three drilling and two workover rigs currently operating
-- Licence extension granted for Chachahuen Norte block
License status
During 2015 the Province of Mendoza issued a resolution creating
a new period of evaluation for the heavy crude oil prospect in the
north part of the Chachahuen block, whilst the southern areas
passed into the second period exploration and development
phase.
As a consequence the Chachahuen block was divided into the
following sub blocks:
Chachahuen Sur (Development block)
After the declaration of commerciality, in October 2013 the
Mendoza province awarded an initial exploitation period of 25
years.
This development block covers an area of 72 km(2), in the south
of the Chachahuen block that borders the energy-rich Neuquén
Province.
Development and Delineation Drilling
As part of our ongoing development drilling program a total of
26 new development and appraisal wells have been drilled and
completed since the end of June 2015, which are all producing
wells.
During 2015 a total of 12 appraisal wells were drilled and
completed successfully, which have extended the field limits.
The wells targeted the clastic member, cycle 2 and 3 of the
Rayoso formation deposited during the early Cretaceous in an
environment predominantly continental. These separate units are
composed of a succession of fine sandstones, red mudstones, and
minor evaporates.
Oil Production
A total of 97 wells are now on stream producing approximately
5,989 bpd (1,197 bpd net to Andes).
In all wells a progressing cavity pump artificial lift system
has been installed which best suits the conditions of the wells and
has long been proven to be efficient.
As part of the second stage of the infrastructure development a
new oil pipeline was commissioned. The new pipeline has a diameter
of 36 inches and this 10 km extension will reduce transportation
costs.
Enhanced Oil Recovery - Water Flood Project
Since the end of June 2015, two injection wells were drilled,
completed and tied to the injection network and six additional
production wells were converted to injection wells increasing the
average rate of injection from 1,800 bpd to 3,600 bpd through a
total of 17 injection wells increasing the recovery rate.
Chachahuen Sur (Exploration block)
This exploration block covers an area of 478 km(2). A two and a
half year extension has been granted to the JV, subject to the
following commitments:
-- Acquisition of 478 km(2) of 3D seismic
-- Process and interpret acquired 3D seismic
-- Drill four exploratory wells
Chachahuen Norte
In this zone a new oil play has been explored by drilling five
shallow stratigraphic wells. This campaign targeted the sandstone
pinch-out of the Neuquén group in the north part of the Chachahuen
block. Several fresh oil shows and core samples soaked in heavy,
viscous and biodegraded oil were recovered during the drilling
stage.
A three year evaluation period has been granted to the JV to
evaluate the potential of this zone, which covers an area of 1,480
km(2), subject to the following commitments:
-- Completion of one previously drilled well
-- Drill one stratigraphic well targeting the Neuquen group
-- Implement a two well pilot project to test productivity
-- Delineation of ten shallow well drilling program
Chachahuen Centro
This exploration block covers an area of 464 km(2). A two year
extension has been granted to the JV, subject to the following
commitments:
-- Acquisition of 267 km of 2D seismic
-- Drill one exploratory well
An area totalling approximately 460 km(2) of the original
Chachahuen licence area has now been relinquished.
Exploratory Activities
The 3D and 2D seismic programs have been completed successfully,
covering 552 km(2) on the Chachahuen Sur exploration block and the
Chachahuen development block and 267 km of 2D seismic on the
Chachahuen Centro block.
Computer processing of the 3D data is in progress and
preliminary results have identified the "LaOrx-1" prospect
targeting the Centenario , Mulichinco and deeper Tordillo
formations. The low cost exploration well "LaOrx-1" is located
approximately 17 km southeast of the discovery well "Chus x-2" on
the Chachahuen Sur evaluation block. The completion program and
analysis of results is due to be finished by the end of the
month.
A second low cost exploration well "CeMo x-1" has been spudded
on the "Chachuen Centro" block targeting Mulichinco, a Centenario
formation. The well is located approximately 37 km northeast of the
discovery well "Chus x-2"
Nicolas Mallo Huergo, Chairman, commented: "Chachahuen has
proven to be a high quality oil asset characterized by a
significant ongoing development plan with excellent exploratory
results to date with new prospects and leads identified encouraging
us to continue with this exploration and development program. The
excellent results to date are an important step towards
understanding and untapping the overall potential and commerciality
of the block."
Change of name of Nominated Adviser and Broker
The Company also notifies that its Nominated Adviser and Broker
has changed its registered name from Westhouse Securities Limited
to Stockdale Securities Limited.
For further information please contact:
Andes Energia plc Nicolas Mallo Huergo, T: +54 11
Chairman 4110 5150
Alejandro Jotayan,
CEO T: +44 20
Billy Clegg, Head 3757 4983
of Communications
Macquarie Capital Jon Fitzpatrick T: +44 20
(Europe) Ltd Fergus Marcroft 3037 2000
Guy de Freitas
Westhouse Securities Antonio Bossi T: +44 20
David Coaten 7601 6100
Camarco Gordon Poole T: +44 20
3757 4980
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 30 years of
experience and is a member of the SPE (Society of Petroleum
Engineers).
Note to Editors:
Andes Energia plc is an oil and gas exploration and production
company focused on onshore assets in South America with a market
capitalisation of circa GBP107m. The Company has its main
operations in Argentina and Colombia.
The Company has approximately 25* MMbbls of conventional 2P
reserves, and it also has certified prospective resources of 640
MMboe, primarily in the Vaca Muerta unconventional development in
Argentina and over 7.5 million acres across South America.
The Company has approximately 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 North
America, currently producing 45,000 boepd. 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 shale.
The Company currently produces approximately 3,200* boepd in
Argentina and Colombia from six conventional fields in Argentina
and two in Colombia, with positive cash flows generated.
*Includes 100% of Interoil's net reserves and production
This information is provided by RNS
The company news service from the London Stock Exchange
END
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