MercoPress. South Atlantic News Agency

Promising gas discovery in southern Chile Magallanes Region

The Palos Quemados 1 well was drilled to a total depth of 1.600 meters

GeoPark Holdings has revealed the discovery of the new Palos Quemados gas field on the Tranquilo block in Chile in the southern region of Magallanes. The Palos Quemados field is the first gas discovery in the Tranquilo Block by GeoPark and the first hydrocarbon discovery in the Magallanes Fold and Thrust Belt in more than 40 years.

GeoPark operates and has a 29% working interest in the block. GeoPark drilled and completed the Palos Quemados 1 well to a total depth of 1.600 meters. A test conducted in the El Salto formation, at approximately 805 meters, resulted in a production rate of 4.0 million cubic feet per day of gas, through a choke of 10 millimeters and with a well head pressure of 1,050 pounds per square inch.

Further production history will be required to determine stabilized flow rates and the extent of the reservoir, said the company in a release.

The Palos Quemados 1 well is located approximately 6 kilometers from a regional gas pipeline and studies are under way to assess facilities needed to connect the gas to market.

GeoPark has interests in nineteen exploration, development and production blocks in Chile, Colombia and Argentina. In 2013, GeoPark will carry out a 35-45 well drilling program in Chile and Colombia – with a total work program investment of 200-230 million dollars.

Commenting, James F. Park, CEO of GeoPark, said: “The result from this new gas field discovery in Palos Quemados is significant because it confirms the exploratory potential and prospectivity of the western part of the Magallanes Basin where additional opportunities have been identified. GeoPark remains committed to finding and developing oil and gas reserves in Southern Chile – and our ambitious investment and activity in the region continues to open up new horizons and opportunities”.

GeoPark Holdings had positive production results from oil and gas operations in Chile and Colombia during the fourth quarter last year. Oil and gas output increased 22% to 10.627 barrels of oil equivalent per day (boepd) from 8,710 in the comparative period in 2011.

Crude oil rocketed 110% to 7,939 barrels of oil per day (bopd) during the quarter while yearly production was up 49% to 11,276 boepd.

The results were driven by drilling success in Chile and Colombia. Wells in Chile during the quarter included the Yagan 2, which produced 610 bopd, along with Konawentru 4 (900) and Yagan 4 (600). Columbian wells Tua 3 and Tua 2, produced 1,100 and 1,700 bopd respectively.

Last year Korean conglomerate LG International Corporation acquired a stake in GeoPark's 10 Colombian hydrocarbon blocks by becoming a 20% shareholder in GeoPark Colombia. GeoPark's work in 2012 included drilling 44 new wells with a capital expenditure over 180m dollars.