Third major joins Canacol in Colombia shale oil quest

A ConocoPhillips Co. unit has taken a farmout from a subsidiary of Canacol Energy Ltd., Calgary, to explore and potentially develop shale oil and conventional light oil on Canacol’s Santa Isabel E&P in Colombia’s Middle Magdalena basin.

Canacol Energy Colombia SA as operator and ConocoPhillips Colombia Ventures Ltd. will spud the first exploratory well on Santa Isabel, Oso Pardo-1, in the 2013 second quarter to test conventional light oil in the Tertiary Lisama reservoir and potential deeper oil reservoirs in Cretaceous La Luna. Oso Pardo-1 is 12 km west of Canacol and ExxonMobil’s Mono Arana-1 Lisama oil discovery well on the VMM 2 block.

ConocoPhillips will carry drilling, completion, and testing costs of up to 13 wells to earn 70% of Canacol’s 100% working interest in the Cretaceous section. The split is expected to be five exploratory wells and eight appraisal wells.

Canacol will retain 100% interest in the Tertiary section. ConocoPhillips will also pay Canacol a $13.5 million bonus in two tranches on the fulfillment of certain conditions. Canacol will remain operator of Santa Isabel for the drilling, completion, and testing of up to the second exploratory well.

Formal assignment of the working interest to ConocoPhillips is subject to the approval by Colombia’s ANH.

Canacol said Santa Isabel exposes the company to a potentially large, unconventional shale oil fairway in the thick Cretaceous La Luna and Tablazo formations analogous to the Eagle Ford formation in the US and the Vaca Muerta formation in Argentina.

Santa Isabel is one of five E&P contracts in which Canacol has interests that expose the company to a potentially large unconventional shale oil play as supported by the recent oil discovery on Canacol’s adjacent VMM 2 contract (OGJ Online. Apr. 16, 2012).

Canacol has exposure to 334,000 net acres of shale oil potential on the five contracts. They are VMM 2 (Canacol 20% interest, 15,000 net acres, ExxonMobil operator), VMM 3 (Canacol 20% right to back in, 17,000 net acres, Shell operator), Santa Isabel (Canacol 30% operated interest, 30,000 net acres), COR 39 (Canacol 70% operated interest, 95,000 net acres), and COR 11 (Canacol 70% operated interest, 177,000 net acres).

The Mono Arana-1 well went to a total depth of 9,942 ft measured depth on VMM 2 to test Lisama sandstone and deeper shale and carbonate reservoirs in the La Luna and Tablazo oil source rocks.

The well topped the La Luna at 9,180 ft MD and cut 760 ft of La Luna with good oil and gas shows throughout but did not penetrate deeper zones due to high pressure encountered while drilling. Logs indicate the part of the La Luna penetrated in the well contains 230 ft of potential net oil pay with 14% average porosity.

In the Lisama, topped at 4,800 ft MD, two sandstone intervals flowed at a combined average 1,242 b/d of 20° gravity oil on short-term tests, and a 3-month Lisama production test is planned. Logs indicate the Lisama has 85 ft of potential net oil pay with 21% average porosity in three main zones.

ExxonMobil Exploration Colombia will become block operator, subject to ANH approval, after which the partners will reenter the cased well to further evaluate the La Luna late in the 2013 second quarter.

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