MercoPress. South Atlantic News Agency

Oil and gas finds in the Magellan basin, extreme south of Chile

James F. Park, GeoPark Chief Executive Officer

Latin American oil and gas exploration and production company GeoPark Holdings (AIM: GPK) revealed this week new gas and oil finds on the Fell block in the extreme south of Chile.

The firm released details about the successful testing of the wells - Cerro Iturbe 1, the new gas discovery, and Tetera 4, the new oil producer - in an update on its drilling activities on the block.

GeoPark operates and has a 100% working interest in the Fell Block which is located on continental Chile at the Atlantic entrance of the Magellan Strait.

Cerro Iturbe 1 was drilled and completed to a total depth of 3,094 metres on an un-drilled prospect located in the northwest region of the Fell Block.

A production test in the Springhill formation, at approximately 2,984 metres in a 14.5 metres perforated interval, flowed at a rate of approximately 14.6 million cubic feet per day of gas (mmcfpd) (or 413,770 cubic metres per day of gas) with 137 barrels per day (bpd) condensate and no water through a choke of 14 millimetres (mm) and with a well head pressure of 2,417 pounds per square inch (psi).

These are preliminary results and further production history will be required to determine stabilised flow rates from this well. A gas flow line is being constructed and it is expected to connect the well to the main pipeline and marketing infrastructure during July.

Tetera 4 was drilled and completed to a total depth of 3,057 metres on a prospect in the north central region of the Fell Block which had tested small quantities of oil by previous license holders but never been produced commercially.

A production test in the Springhill formation, at approximately 2,912 metres in a 2.5 metre perforated interval, flowed at a rate of approximately 115 bpd of oil and 350 bpd of water through a choke of 12 mm and with a well head pressure of 43 psi.

A beam pump and surface facilities have been installed and the well has now been put on production at a rate of approximately 100 bpd oil and 250 bpd water. Further production history will be required to determine stabilised flow rates from this well and potential development drilling opportunities.

In other drilling activities on the Fell Block in Chile, an appraisal well Ayelen 2, targeted for the shallow El Salto (Tertiary) gas producing formation, reached total depth of 883 metres. Production testing is scheduled during July 2010.

GeoPark is currently drilling well Yagan Norte 2 which is targeting the Springhill and Tobifera formations at depths of approximately 3,000-3,200 metres. GeoPark is also currently recording a 3D seismic survey on the Otway Block in Chile.

During 2010, GeoPark is carrying out a work and investment program totalling 50-60 million US dollars and consisting of a 14-18 well drilling program, 2D and 3D seismic surveys and an expansion of its production infrastructure.

GeoPark owns and operates 6 blocks in Chile and Argentina with a total of 3.7 million gross acres.

Commenting, James F. Park, Chief Executive Officer, said: “We are pleased with continuing strong results from our drilling programme on the Fell Block in Chile – and with our team’s demonstrated reliability in both discovering new fields and rehabilitating abandoned fields”, said CEO James F. Park.

He added the company was looking forward with confidence “to the remainder of our work programme this year, which represents a balance of development, appraisal and exploration wells and seismic focused on both increasing oil and gas production and reserves and opening up new prospective areas on the Fell, Otway and Tranquilo Blocks”.

GeoPark currently represents 30% of Chile’s hydrocarbons production and supplies all the oil extracted to Chile’s government oil company Enap and all the natural gas to the huge methanol complex, a few miles from Punta Arenas, Methanex which is the world’s major producer of methanol.