Petrolifera Petroleum Limited says that upon opening the La Pinta 1X well to flow on test on February 18, 2010, following the installation of two inch screens to impede the influx of sand from the upper 25 foot interval of the Cienaga de Oro (CDO) crude-oil bearing formation being tested in the well, the well ceased to flow after approximately three hours of flow, likely again due to sanding issues. Subsequent static gradient analysis indicated that the upper portion of the fluid influx into the tubing was hydrocarbons, with the balance likely mud or some combination thereof.

In order to attempt to secure a definitive test of the crude oil-bearing CDO, the company's management and advisors have re-examined and assessed the various available alternatives. These primarily included another more complex operation to re-test the CDO, or the drilling of a sidetrack to again penetrate and then test the full CDO interval which was indicated to be hydrocarbon-bearing and yielded light gravity crude oil on test. Drilling a sidetrack would also have afforded the company with the prospective ability to preplan the availability of enhanced sand control techniques, as a result of key learnings from efforts to date to secure a longer-term test the CDO formation in the La Pinta 1X well. Having regard to economic and financial factors, the perceived technical risk and assessment of the overall chance of success of these two choices, it was concluded that neither of these two alternatives were viable at this time.

Accordingly, a decision has been made to set a cement plug above the CDO and then to move uphole to test a zone in the Upper Porquero Formation. This zone was determined to be prospective based on log analysis and shows of crude oil and natural gas during the drilling of the well. If the Upper Porquero test is successful, efforts will be made to complete the well to evaluate its commercial potential. It should be noted under these circumstances that a new well bore would be needed to evaluate the deeper CDO. Alternatively, if testing of the Upper Porquero disappoints, we could still consider a sidetrack to penetrate and test the full CDO at a later date.

Tags: Petrolifera Petroleum Limited