LLA-27 block - looks very promisingThe Jennings report is excellent reading. If you don't have access, sign up - it's free.
LLA-27 (Exploration). Quetzal participates in a farm-in with Montecz S.A. (19.5% W.I.)
and NCT EG Energy Group C.A. (12.0% W.I.). The Company will pay 50.0% of the
Phase One costs, which amounts to US$6.5 million gross (US$3.2 million net), to initially
earn 45.3% of net revenue until Phase One costs have been recuperated. The
Company’s working interest will then be lowered to 34.3%.
LLA-27 covers 40,698 acres and is on trend with several producing blocks; specifically
the La Punta, Moriche and Rancho Hermoso blocks, which house numerous oil and gas
fields. The La Punta block is the most interesting analogy to the LLA-27 block. Three
wells have been drilled on a fault trend that is believed to continue into the LLA-27 block.
The most recent well, La Punta-3 had an I.P. rate of 2,771 Bbl/d of 35° API oil, which
increased to 3,377 Bbl/d by early June 2010, all on natural flow. Quetzal has it on good
authority that the La Punta-3 well is producing over 4,000 Bbl/d using an ESP. These
wells are less than 5 km from five structures identified in LLA-27.
Quetzal has a net P50 resource estimate of 3.1 MMBbl and an internally generated
before tax NPV 10% of US$18.0 million; prior to the acquisition of 3D seismic. Quetzal
plans to drill the first exploration well in Q1/11 at an expected net cost of US$7.5 million.
The Company believes wells could produce up to 5,000 Bbl/d, considering the prospects
at La Punta extend into LLA-27. Bob Szczuczko was President and CEO at Delavaco
Energy Inc., and that company had a small interest at La Punta. He is familiar with the
producing structures at La Punta and believes the five identified structures at LLA-27 are