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Gran Tierra Energy Provides Update to Costayaco Field Reserves and Results at C9

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posted on Sep 02, 2009 07:07AM

Gran Tierra Energy Provides Update to Costayaco Field Reserves and Results of Logging Operations at Costayaco-9

    Plateau Production of Approximately 19,000 Barrels of Oil per Day Gross
    Established Early

Gran Tierra Energy Inc. (NYSE AMEX: GTE; TSX: GTE), a company focused on oil exploration and production in South America, today provided a reserve update, effective July 31, 2009, for the Costayaco field located in the Chaza Block of the Putumayo Basin of Colombia. Gran Tierra Energy also announced that it has completed the drilling and logging of Costayaco-9 and established plateau production in the Costayaco field ahead of schedule. Gran Tierra Energy is the operator of the Costayaco field and the Chaza Block with a 100% working interest.

"Attaining plateau production in the Costayaco field marks a major milestone in the history of our company," said Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy. "Following our discovery in 2007 of Costayaco, one of the largest light oil field discoveries in Colombia in the last decade, we are on track to complete the development of the field by the end of this year. With well established reserves, and strong cash flow expected to be generated from Costayaco's plateau production in the coming years, Gran Tierra Energy is well positioned to focus on its upcoming 14 well exploration program in Colombia and Peru in late 2009 and 2010."

Costayaco Reserves Update

GLJ Petroleum Consultants have provided an independent reserve evaluation of the Costayaco field effective July 31, 2009. Taking into consideration 3D seismic, and drilling results from eight wells (Costayaco-1 through Costayaco-8), the reserve evaluation indicates that as of July 31, 2009, the Costayaco field had gross proved reserves of 19.7 million barrels of oil (MMbbl), gross proved plus probable reserves of 30.3 MMbbl, and gross proved plus probable plus possible reserves of 43.5 MMbbl.

Cumulative production from January 1, 2009 to July 31, 2009 was approximately 2.186 MMbbl gross, or 1.912 MMbbl net after royalty. Accounting for production, proven and probable reserves increased during 2009 due to additional development drilling (Costayaco-8), and technical revisions resulting from routine and special core analyses. These revisions include an increase in oil saturation estimates and an increase in the oil recovery factor for the field. The reduction in possible reserves was due to the previously announced results for Costayaco-7.

Gran Tierra Energy's reserves as of July 31, 2009, net after royalty, compared with year end 2008 for the Costayaco field, accounting for production during the period, are as follows:

    -   Total net after royalty proved reserves (calculated in accordance
        with United States Securities and Exchange Commission rules) were
        14.16 MMbbls at July 31, 2009 compared with 15.29 MMbbls at year end
        2008, a decrease of 7%. The decrease is due to production, partially
        offset by upward technical revisions and reserve additions from
    -   Total net after royalty proved plus probable reserves (calculated in
        accordance with Canadian requirements (NI 51-101)) were 21.31 MMbbl
        at July 31, 2009 compared with 21.49 MMbbl at year end 2008, a
        decrease of 1% due entirely to production; and
    -   Total net after royalty proved plus probable plus possible reserves
        (calculated in accordance with Canadian requirements (NI 51-101))
        were 30.37 at July 31, 2009 compared with 36.25 at year end 2008, a
        decrease of 16%, with one third of the decrease due to production.

    The following table summarizes gross reserves for the field, and Gran
Tierra Energy's gross and net reserves. Proved reserves are based on SEC
reserve definitions with a July 31, 2009 posted price. Probable reserves and
possible reserves are based on the requirements of National Instrument 51-101.

                                                   Gran Tierra   Gran Tierra
                                                        Energy    Energy Net
    Light and Medium Oil                   Gross       Working         After
                                        Reserves      Interest       Royalty
                                      (Costayaco)     Reserves      Reserves

    Reserves Category                      MMbbl         MMbbl         MMbbl

        Producing (SEC Compliant)           9.55          9.55          6.93
        Undeveloped (SEC Compliant)        10.11         10.11          7.23
    Total Proved (SEC Compliant)           19.66         19.66         14.16
    Total Proved (NI 51-101 Compliant)     19.66         19.66         13.93
    Total Probable (NI 51-101 Compliant)   10.63         10.63          7.38
    Total Proved Plus Probable
     (NI 51-101 Compliant)                 30.29         30.29         21.31
    Total Possible (NI 51-101 Compliant)   13.22         13.22          9.06
    Total PPP (NI 51-101 Compliant)        43.51         43.51         30.37

    The following table summarizes changes in gross reserves for the Costayaco
field. Proved, probable, and possible reserves are based on the requirements
of National Instrument 51-101.

    Reserves        Year-end                    Gain     July 31,
     Category           2008               (loss) in        2009
    (NI 51-101      Reserves  Production    Reserves    Reserves
     Compliant)       MMbbls      MMbbls      MMbbls      MMbbls  Variance %

    Gross Proved
     Producing         8.888      (2.140)      3.052       9.800         10%

    Gross Proved
     Undeveloped      11.414      (0.046)     (1.511)      9.857        -14%

    Gross Total
     Proved           20.302      (2.186)      1.541      19.657         -3%


    Gross Total
     Proved Plus
     Probable         30.595      (2.186)      1.883      30.292         -1%


    Gross Total
     PPP              52.418      (2.186)     (6.723)     43.509        -17%

Production Plateau

Plateau production of 19,000 barrels of oil per day (BOPD) gross for the Costayaco field, scheduled to be attained in the fourth quarter of 2009, has now been established. Production has been averaging approximately 16,700 BOPD net after royalty from the Costayaco field since attaining plateau production in early August. An increase in royalties expected at the end of the third quarter of 2009, once cumulative production reaches 5 million barrels for the Costayaco field, will subsequently result in a net after royalty production level of approximately 13,000 BOPD from the Costayaco field. This is in addition to expected production of approximately 1,200 BOPD net after royalty from Gran Tierra Energy's other operated fields in the Putumayo Basin, and approximately 1,000 BOPD net after royalty production from Argentina.


Gran Tierra Energy has completed drilling and logging operations for Costayaco-9, a vertical development well located 1,950 feet southwest of Costayaco-8. Well logs indicate that the T Sandstone of the Villeta formation lies completely within the field's oil column and that the Caballos formation encountered an oil-water contact consistent with the established Caballos oil-water contact for the field.

The well reached a total measured depth (MD) of 8,580 feet on August 17, 2009 after drilling through the same reservoir sequences encountered in previous wells drilled in the field. Log interpretations from data acquired after drilling indicate the presence of reservoir sandstones in the T sandstone beginning at 8,197 feet MD with an approximate net pay thickness of 22 feet, as well as in the Caballos sandstone beginning at 8,321 feet MD with approximately 46 feet of net pay. These results are consistent with pre-drill estimates.

Completion and testing operations are currently underway at Costayaco-9 with the drilling rig. Test results are expected in the latter part of September.


Costayaco-10 is scheduled to be drilled next, with drilling expected to begin in late September. It will be drilled approximately 2,500 feet southwest of Costayaco-9. The main objective of Costayaco-10 is to add production capacity to assist maintaining the gross production plateau of 19,000 BOPD from Costayaco field. In addition, it is expected to convert probable and possible reserves into proven and probable reserves. This is the last well planned to be drilled in the Costayaco field in 2009.

About Gran Tierra Energy Inc.

Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated in the United States, trading on the NYSE Amex Exchange (GTE) and the Toronto Stock Exchange (GTE), and operating in South America. Gran Tierra Energy holds interests in producing and prospective properties in Argentina, Colombia and Peru. Gran Tierra Energy has a strategy that focuses on establishing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth. Additional information concerning Gran Tierra Energy is available at www.grantierra.com.

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