Drilling Update

Published Monday 10th, November 2008.
Article Category: Announcements
SummaryThe Board of Andes (AIM: AEN), the Latin American energy group, announces an update on the drilling of its first exploration well, named Kil.ch.EB.x-1001.
Article Content
Andes Energia plc (Andes or the Company)

Drilling Update

Confluencia licence – Well Kil.ch.EB.x-1001

The Board of Andes (AIM: AEN), the Latin American energy group, announces an update on the drilling of its first exploration well, named Kil.ch.EB.x-1001.

Traces of hydrocarbons encountered

Presence of target reservoir formation confirmed

Well drilled up-dip from previous well

Kil.ch.EB.x-1001 was drilled 5 km to the East of an old well, informally referred to as El Bloque 1,which had been drilled in 1997 by YPF, in the Confluencia exploration area (Chubut Province, northern margin of the San Jorge Basin). The well was targeted as an updip test of El Bloque 1 on a mapped structural closure.

The old El Bloque 1 well had found good quality reservoirs in the Castillo Formation (Top Lower Cretaceous). Two intervals of 2 metres each were tested between 1238 and 1345 meters below derrick floor (bdf) and yielded hydrocarbons with very high water cut.

The Kil.ch.EB.x-1001 well was spudded on 24 September 2008 and reached a total depth of 2001 meters bdf, without encountering any technical difficulty, in clastics attributed to the Cerro Guadal Formation (Neocomian). There were no overpressure or mud losses and the well was cased to total depth.

The Castillo Formation, the main objective in the well and the producing horizon of the Campo Arre oilfield owned by Repsol YPF, S.A. (located 11 km to the South West of Kil.ch.EB.x-1001 and 8 km to the South of El Bloque 1), was encountered deeper than expected, demonstrating that further data and analysis are required to define better the local structure and that of the Confluencia exploration area generally.

It is of interest to note that high sand percentages were reported. Isolated gas peaks were observed near the top of this formation, followed by a general increase in gas detection, accompanied by traces of hydrocarbons in the mud, starting at around 1360 meters bdf. Wireline logs, sidewall samples and hydrocarbon shows are currently being evaluated and an announcement regarding further downhole sampling or testing will be made in due course.

In addition, further seismic is planned for the Confluencia exploration area to identify potential traps and future drilling locations.