CALGARY, Alberta – December 3, 2008 – Gran Tierra Energy Inc. (Amex: GTE; TSX:GTE), a company focused on oil exploration and production in South America, today announced that it had completed drilling Costayaco-6, a new well in the Costayaco Field in the Chaza Block, in the Putumayo Basin of southern Colombia, encountering oil deeper in the primary reservoir zone than previous wells in the field. Gran Tierra Energy has also completed drilling Zafiro-1, an exploratory well in the Guachiria Norte Block in the Llanos Basin of eastern Colombia. No hydrocarbons were encountered so the well has been plugged and abandoned.
Costayaco-6, Chaza Block, Putumayo Basin
Gran Tierra Energy completed drilling operations for Costayaco-6, the sixth well drilled in the Costayaco field, an oil field discovered in 2007. Gran Tierra Energy has a 100% working interest and is the operator of the Chaza Block and the Costayaco field.
Costayaco-6 was spud on October 5, 2008. It is a southwestern delineation well for the Costayaco field (approximately 6,923 feet to the southwest of Costayaco-5). Costayaco-6, a directional well, reached total measured depth, or MD, of 8,867 feet (8,571 feet true vertical depth, or TVD) on November 13, 2008. Costayaco-6 was subsequently cased and is currently waiting on completion and testing which is scheduled to begin in late December.
Although the Upper Villeta T reservoir came in 20 feet lower than the prognosis for Costayaco-6, well logs indicate the presence of hydrocarbons in the Upper Villeta T sand reservoir from -7,076 feet subsea to -7,119 feet subsea (TVD). The net pay for the Upper Villeta T sand reservoir is estimated at 22 feet (MD). The well log also shows the presence of hydrocarbon in the Lower Villeta T sand reservoir from -7,119 feet subsea to -7,126 feet subsea (TVD). The net pay for the Lower Villeta T sand reservoir is estimated at 3 feet (MD). The Caballos Formation is water bearing as expected.
Prior to drilling Costayaco-6, the oil water contact in the Villeta T sand was interpreted to be at approximately -7,090 feet subsea. Preliminary interpretation from well logs indicates that the oil water contact for the Upper Villeta T sand is at least 25 feet lower than the previous estimate. Successful testing of this deeper oil has the potential to further increase the reserves in the Costayaco field. Completion and testing of Costayaco-6 is planned before year-end 2008.
Costayaco-7 drilling will commence once the environmental permit is obtained and location construction is completed in December. Drilling is expected to take approximately one month. The main objective of Costayaco-7, in addition to providing new production capacity, is to convert probable and possible reserves in the northern area of the field into proven reserves. A continuous development drilling campaign is planned for 2009.
Production operations in the Costayaco and Juanambu oil fields remain suspended while the pipeline system downstream of Costayaco remains shut-in. Discussions amongst authorities continue, with resolution expected shortly. Production from other assets in the Putumayo Basin, the Llanos Basin and the lower Magdalena Basin continues unimpeded.
Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy, stated, “Gran Tierra Energy continues to have tremendous success delineating and developing the Costayaco field. Plans for the 2009 work program and budget are currently being finalized, with an expectation of another full year of development drilling in the field, complemented with an ongoing exploration drilling campaign through the year.”
Zafiro-1, Guachiria Norte Block, Llanos Basin
Zafiro-1 is an obligation well for the Guachiria Norte Block in the Llanos Basin. Gran Tierra Energy, through its wholly-owned subsidiary Solana Resources Limited, has a 100% working interest in the Guachiria Norte Block. Lewis Energy Colombia has a 30% beneficial interest in this block. Zafiro-1 was spud on November 6, 2008 and drilling operations were completed on November 22, 2008. Zafiro-1 reached a total depth of 8,640 feet. Insufficient reservoir quality sandstones were encountered in the C-3 interval. No sand was encountered in the C-5 interval. The C-7 interval is water bearing. Zafiro-1 was plugged and abandoned.
About Gran Tierra Energy Inc.
Gran Tierra Energy is an international oil and gas exploration and production company operating in South America, headquartered in Calgary, Canada and incorporated in the United States. The company holds interests in producing and prospective properties in Colombia, Argentina and Peru. The company has a strategy that focuses on growing a portfolio of producing properties, plus production enhancement and exploration opportunities to provide a base for future growth. Gran Tierra Energy trades on the American Stock Exchange under the symbol “GTE” and on the Toronto Stock Exchange under the symbol “GTE”.
Forward Looking Statements
The statements in this press release regarding Gran Tierra Energy’s beliefs that testing operations on Costayaco-6 is on schedule to begin testing in late December and that the results have the potential to further increase the reserves in the Costayaco field, the timing of commencement and completion of drilling Costayaco-7, Gran Tierra Energy’s drilling plans for 2009, and expected resolution of discussions amongst authorities and stakeholders regarding the pipeline, are "forward-looking statements" within the meaning of the U.S. federal and Canadian securities laws, including Canadian Securities Administrators’ National Instrument 51-102 Continuous Disclosure Obligations and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. Although, Gran Tierra Energy believes that the assumptions underlying, and expectations reflected in, these forward-looking statements are reasonable, it can give no assurance that these assumptions and expectations will prove to be correct.
Factors that could cause results to differ materially from those described in the forward-looking statements include: Gran Tierra Energy’s operations are located in South America, and unexpected problems can arise due to guerilla activity, technical difficulties and operational difficulties which impact the production, transportation or sale of oil and gas; unexpected problems due to technical difficulties, operational difficulties, and weather conditions; the strike and state of emergency in Colombia may continue for longer than Gran Tierra Energy expects, which could impact Gran Tierra Energy’s ability to complete testing and drilling on schedule and may also impact production; heightened unrest could imperil the safety and security of Gran Tierra Energy’s assets and personnel despite the safety measures Gran Tierra Energy has put in place to address the current situation, which could also delay the testing and drilling and could also impact production; and those other risks found in the periodic reports filed by Gran Tierra Energy with the United States Securities and Exchange Commission, including in the section entitled “Risk Factors” in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 6, 2008, and available at the Securities and Exchange Commission's internet site www.sec.gov and on SEDAR at www.sedar.com.
All forward-looking statements in this press release are expressly qualified by information contained in each company's filings with regulatory authorities and, subject to its obligations under applicable securities laws, Gran Tierra Energy does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.