Pacalta's Ecuador E&P Progressing
Development drilling continued through the end of 1998 on the Fanny Field 20 pad. Fourth quarter activity on the pad included the drilling of one vertical location which has been completed and equipped for production. In addition, the Company recently completed its first two horizontal wells in Ecuador (Fanny 18B-24H and Fanny 18B-22H) on the Fanny 20 pad. Initial tests in the ``M-I'' sandstone yielded rates of 14,000 BOPD and 7,400 BOPD, respectively from these horizontal wells.
Pacalta drilled the seventh and eighth locations on the Dorine Field during the fourth quarter (Dorine 5 and Dorine 4). Initial test rates from the ``M-1'' sandstone were approximately 5,400 BOPD and 4,200 BOPD, respectively.
The Company has drilled a total of six wells to date in the Mariann 4A light oil pool (including one well completed as a potential water injector). High quality light oil was encountered in both the ``T'' and ``U'' sandstones of the Napo formation. Initial tests in the ``T'' sandstone showed flow rates of up to 3,600 BOPD of 31 to 32 degree API. The ``U'' sandstone tested at a rate of up to 2,600 BOPD of 26 degree API in the individual wells. In addition, a significant accumulation of 19 degree API oil has been identified in the ``M-1'' sandstone at the Mariann 4A field which will be considered for future delivery to the proposed heavy oil pipeline.
On Block 27, the Tipishca 2 well was tested during the fourth quarter of 1998. The Tipishca 2 well tested at an average rate of 2,000 BOPD of 26 to 32 degree API oil from the Upper ``T'' and Lower ``U'' sandstones. In the Blanca region of Block 27, which is situated in the northwest corner of the Block, the Company completed the field acquisition of the 303 square kilometer 3D seismic survey. The current exploration plan for Block 27 involves processing and interpreting the remainder of this 3D seismic program, to be followed by an exploratory drilling program in late 1999 or 2000, if warranted.
Pacalta is currently reviewing the capital budget for 1999. The current capital expenditure outlook of approximately $35 million includes exploration and development activity and facility construction on City Block and Block 27.
The Company continues discussions with the other four major oil companies in Ecuador regarding the construction and financing of a new heavy oil pipeline. Negotiations with the government of Ecuador on the general terms and conditions of this project are continuing.