Joint Venture Update
Published Thursday 26th, June 2008.
Article Category: Reports
Summary Article Content
Andes (AIM: AEN) announces an update on the exploration and drilling programs adopted by the joint venture Union Transitoria de Empresas (\”UTEs\”), registered joint ventures, for the licence blocks held under the consortium agreement between Andes and Patagonia Oil & Gas S.A. Andes holds a 20% royalty interest, a 20% carried interest and a 3% working interest in the licences held by the consortium and the UTEs. Significant elements of the work completed and planned include: 4 exploration wells planned $21 million committed Over 2,000km existing seismic data re-interpreted 2,000km 2D and 1,000km² 3D seismic under tender Approximately 35,000km² aeromag and aerogravity survey expected to be completed by the end of July 2008 Drilling The UTEs are at an advanced stage of appointing a drilling contractor to carry out exploration drilling in the San Jorge basin. The Group has an interest in six licence blocks in this basin, Confluencia, San Bernardo, Pampa Salamanca Norte, Buen Pasto, Sierra Cuadrada and Rio Seguerr. These blocks cover an area of approximately 25,000km². The Company anticipates that the first well will be drilled within the next 60 days in the Confluencia block. This well is the first of an initial four well exploration drilling program which is expected to be completed by March 2009. The first well is located at E: 243396.10 and N: 4929744.79 and will be drilled to a final depth of 1,456 metres. It is anticipated that it will take approximately 10 days to drill to final depth and complete testing. This well is designed to evaluate the potential oil bearing zone identified through the interpretation of acquired seismic data and old well logs. The Company anticipates drilling the second well in the San Bernardo block. It is expected that this well will be located close to the existing producing fields in neighbouring licence areas, subject to completion of seismic interpretation. It is expected that the third and fourth wells will also be drilled on the licence blocks in the San Jorge basin, subject to firming up prospects. Seismic survey update Seismic data re-interpretation on Confluencia, Buen Pasto, San Bernado, Rio Senguerr and Sierra Cuadrada has been completed. Approximately 2,061km of 2D seismic data has been reprocessed on these blocks. This data together with the other processed data has been used to identify the initial drill targets. The UTEs have entered into a tendering process to secure a contractor to conduct a further 2D and 3D seismic data acquisition program for 2,000km 2D and 1,000km² 3D seismic. Two contractors have been short-listed and this work is due to be carried out at the same time as the drilling of the first exploration well referred above. The specifics of the program will be defined on a case by case basis. Aeromagnetic Carson Helicopters Inc., Aerogravity Division, from the USA, has been contracted to carry out a 34,780km² aeromag and aerogravity program over the licence blocks in the San Jorge basin. As of the date of this announcement approximately 22,363km² of the program area has been covered, representing 65% of the planned program, with an expected completion date, subject to weather conditions, by the end of July 2008. Once completed the results of the survey will be correlated with the results from the seismic and geochemical programs and will be used to select additional drill targets. Geochemical Soil gas geochemical surveys were conducted by Exploration Technologies, Inc. A total of 1,196 samples were gathered from the Confluencia, Buen Pasto, San Bernado, Pampa Salamanca Norte, Rio Senguerr and Sierra Cuadrada blocks. Preliminary results indicate a high level of soil gas anomalies, particularly in the Rio Senguerr block, the northern portion of the Confluencia block and the western portion of the Pampa Salamanca Norte block, which may prove prospective. Funding The UTEs have committed up to US$21 million to fund these exploration programs. These expenditures are covered by the funding arrangement with Petrosaudi previously announced (25 February 2008). Luis Alvarez Poli, Chief Executive Officer of Andes stated,\”We are delighted with the progress of our exploration programs and the fact that we will shortly commence drilling. The new data once interpreted will add significantly to our already substantial database, including recently completed digitisation and re-processing of 2D seismic data acquired by earlier exploration activities undertaken by other companies. This data will assist us in selecting additional drill sites on our licence blocks\”. Enquiries: Andes Energia plc Luis Alvarez Poli, CEO Nigel Duxbury, FD T: 020 7495 5326 Arbuthnot Securities James Steel Antonio Bossi T: 020 7012 2000 Bishopsgate Communications Limited Maxine Barnes Nick Rome T: 020 7562 3350