CALGARY, Canada, January 15, 2008 - Gran Tierra Energy Inc. (OTC BB: GTRE), a company focused on oil exploration and production in South America, today announced that it has successfully completed the drilling of the Costayaco-2 well in the Putumayo Basin of Colombia and has initiated preparations for testing the primary hydrocarbon reservoirs encountered.
Costayaco-2 is the second well to be drilled in the Costayaco field, an oil field discovered in the Chaza Block in the second quarter of 2007. The well is located 560 meters northeast of the Costayaco-1 discovery well. Drilling of Costayaco-2 was initiated on December 6, 2007 and total measured depth of 8,600 feet was reached on January 2, 2008. The well bore has been cased and the Pride-17 drilling rig was released on January 8, 2008.
Costayaco-2 encountered the same reservoir sequences with similar good oil and gas shows as were encountered in the Costayaco-1 discovery well. Initial log interpretations from data acquired during drilling indicate potential hydrocarbon pay in the Kg Sand Unit of the Rumiyaco Formation, the U Sandstone Unit of the Villeta Formation, the T Sandstone Unit of the Villeta Formation and the Caballos Formation. Preliminary log interpretations indicate better reservoir quality in the T Sandstone and the Caballos Formation compared to Costayaco-1.
The Pride-6 service rig is being mobilized to initiate testing of the primary hydrocarbon reservoirs encountered during drilling. Testing operations are expected to begin in late January and scheduled to be completed in mid-February.
The Pride-17 drilling rig is being mobilized to the Costayaco-3 location. Costayaco-3 is located approximately 960 meters west of the Costayaco-1 location. Drilling is expected to commence in late January and be completed in late February.
Production from Costayaco-1 has increased to approximately 3,500 gross barrels of oil per day (BOPD), or 1,580 BOPD net after royalty to Gran Tierra Energy, as a result of the commingling of two reservoir zones, the Caballos and the Villeta T sandstone reservoirs.
Crude oil production from Costayaco-1 is currently being trucked to new loading facilities in the existing pipeline infrastructure at Uchupayaco. Potential crude oil production from Costayaco-2 will also be trucked to the same facilities. Construction of an 11 kilometer 8 inch pipeline from the Costayaco field to Uchupayaco is expected to begin in mid-April. Upon completion mid-year, this pipeline will replace trucking operations.
The acquisition of a new 70 square kilometer 3-D seismic program over the Costayaco oil field has been completed. This data is currently being interpreted and will be used to assist with the positioning of future development drilling operations in the Costayaco field. Acquisition of 41 kilometers of new 2-D seismic data to define additional exploration potential in the Chaza Block has been initiated.
Gran Tierra Energy holds a 50% working interest and is the Operator of the Chaza Block. Solana Resources Limited holds the remaining 50% working interest. The Chaza Block is subject to the new and fiscally attractive Agencia Nacional de Hidrocarburos royalty/tax contract which includes no additional state participation.
"The continued exceptional production performance of Costayaco-1 combined with the early positive drilling results from Costayaco-2, the pending initiation of drilling of Costayaco-3 and integration of results with the new 3-D seismic data all bode well for efficiently delineating the reserve and production potential of the Costayaco field, allowing us to plan a full field development, including additional drilling, facilities and pipeline to handle new production as appropriate through 2008," stated Dana Coffield, President and Chief Executive Officer of Gran Tierra Energy Inc.
About Gran Tierra Energy Inc.
Gran Tierra Energy Inc. is an international oil and gas exploration and production company, headquartered in Calgary, Canada, incorporated and traded in the United States and operating in South America. Gran Tierra Energy holds interests in producing and prospective properties in Argentina, Colombia and Peru. The company's strategy is focused on establishing a portfolio of drilling opportunities to exploit undeveloped reserves to grow production, as well as undertaking exploration to grow future reserves. Additional information concerning Gran Tierra Energy is available at www.grantierra.com. Investor inquiries may be directed to firstname.lastname@example.org or 1-800-916-GTRE (4873).
Forward Looking Statements
The statements in this press release regarding Gran Tierra Energy's expectations with respect to the timing of testing and drilling operations, transportation of crude oil and the construction of the pipeline, the use to which seismic data will be put, and the ability of Gran Tierra Energy to plan a full field development, including additional drilling, facilities and pipeline to handle new production as appropriate through 2008, are 'forward-looking statements' within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934. Although these forward-looking statements reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements including, but not limited to, in the case of these forward-looking statements: unexpected delays in drilling or pipeline or other transportation infrastructure completion due to equipment failure or other unforeseen reasons; unforeseen events, such as unexpected difficulties in drilling or unexpected discoveries, may cause Gran Tierra Energy to reallocate resources, which may delay drilling, surveys, design plans, transportation infrastructure development and production or alter the mix of development drilling and exploration drilling in Gran Tierra Energy's portfolio; and unexpected costs may decrease funds available to carry out Gran Tierra Energy's plans described in this press release, which could delay or prevent execution of these plans. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Gran Tierra Energy assumes no obligation to update these forward-looking statements to reflect any event or circumstance that may arise after the date of this release, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures, including the risk factors, made by Gran Tierra Energy in its reports filed with the Securities and Exchange Commission, in particular under the caption "Item 1A - Risk Factors" of its quarterly report on Form 10-Q filed on November 8, 2007, which attempt to advise interested parties of the risks and factors that may affect Gran Tierra Energy's business. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, Gran Tierra Energy's actual results may vary materially from those expected or projected.