Alvopetro Energy Ltd. (TSX-V:ALV) is pleased to announce an operational update and our first quarter financial and operating results.
In the first quarter of 2017 we completed drilling and testing our 198(A1) well, located on Block 198 in the Recôncavo basin in the State of Bahia, Brazil. The well was drilled to a total measured depth of 1,480 metres. Based on open-hole logs, the well encountered 31 metres of potential net natural gas pay in the Main Caruaçu Member, with an average 46% water saturation, and average porosity of 11.4%, using an 8% porosity cut-off.
The well also encountered 26 metres of potential net hydrocarbon pay in a series of thinner up-hole Pojuca sands, with an average 51% water saturation, and average porosity of 14.3%, using an 8% porosity cut-off.
We tested two zones in the 198(A1) well in the quarter. During the 48-hour test of the first zone, the well flowed natural gas, on an unstimulated basis, at an average rate of 15,000 m3/d (534 Mcfpd or 89 boepd).
During the 72-hour test of the second zone, the well flowed natural gas, on an unstimulated basis, at an average rate of 76,000 m3/d (2.7 MMcfpd or 447 boepd). The pressure transient analysis from the first zone forecasts potential post-stimulation rates with near well bore damage removed (expected to be achieved using a near well bore acid wash) indicating deliverability of 0.8 MMcfpd (139 boepd) after three months of continuous production and 0.7 MMcfpd (116 boepd) after one year of continuous production. Pressure transient analysis from the second zone forecasts deliverability of 2.1 MMcfpd (343 boepd) after three months of continuous production and 1.8 MMcfpd (303 boepd) after one year of continuous production. The first zone tested natural gas below the previously interpreted gas water contact but is in communication with the water contact. As such, we would likely put the well on production initially from just the second (upper) zone.
The 198(A1) well was drilled as a step-out well to our 197(2) natural gas discovery on our Caburé field and satisfies our work commitment on the block, subject to the approval by the National Agency of Petroleum, Natural Gas and Biofuels of Brazil ("ANP"). We have submitted a declaration of commerciality for the 198(A1) discovery, which will commence the Development and Production Phase for this discovery, subject to ANP approval, with the remaining portion of the block relinquished. We continue to work diligently on finalizing the unitization agreement for the 197(2) and 198(A1) gas discoveries with the adjacent resource owner and expect to secure a natural gas sales contract concurrently with a finalized unitization agreement. Upon execution of these agreements, we expect to commence commercial development of the field.
We achieved significant cost savings on drilling and testing the 198(A1) well compared to past experience. These cost savings enhance the attractiveness of our broader inventory of opportunities. Our next well to be drilled, the 177(A1) well on Block 177, is a shallow oil prospect targeting the Agua Grande and Sergi Formations with expected drilling costs of $0.8 million. We expect to commence drilling in the third quarter of 2017, subject to the receipt of environmental permits.
Financial and Operating Highlights – Q1 2017
Summary of Q1 2017 Financial and Operating Results
The consolidated financial statements with the Management's Discussion and Analysis ("MD&A") are available on our website at www.alvopetro.com and will be available on the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com.
Annual General Meeting
Alvopetro's Annual General Meeting is scheduled to be held on Wednesday June 28, 2017 at 9:00 a.m. at the Eighth Avenue Place Conference Centre, Suite 410 (Fourth Floor), 525 - 8th Avenue S.W. Calgary, Alberta, Canada. All shareholders are invited to attend.
Updated Corporate Presentation
Alvopetro's updated corporate presentation is available at: http://www.alvopetro.com/corporate-presentation.
Alvopetro Energy Ltd.'s vision is to be the premier independent exploration and production company in Brazil, maximizing shareholder value by applying innovation to underexploited opportunities. Our strategy is to focus on three core opportunities including lower risk development drilling on our mature fields, shallow conventional exploration, and the development of the significant hydrocarbon potential present in our deep Gomo tight-gas resource play. Our efforts in the near-term are concentrated on building a natural gas business by finalizing a unitization agreement and securing a gas sales contract.
SOURCE: Alvopetro Energy Ltd
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