Quetzal Energy Ltd. says that Canaguay-1 will be cased as a potential oil well.

Canaguay -1 is the first well to be drilled on our Canaguaro exploration drilling program. The well began drilling operations on June 3, 2010 and was successfully drilled to a final total depth ('TD') of 15,850 feet on August 4, 2010. Well logs indicate in excess of 100 feet of potential net oil pay in several oil zones including the Mirador, Barco, Gacheta and Une, with the Mirador zone containing the majority of the indicated oil pay. The well was terminated at a shallower depth than planned as the prospective oil bearing formations were encountered in a structurally higher elevation than originally prognosed.

As part of the agreement to borrow the Nabors Rig 119 from Petrobras, Quetzal agreed to return the rig no later than August 15, 2010. Quetzal plans to release the Nabors rig by August 15 as per the agreement.

Quetzal has commenced sourcing a suitable service rig and initial testing is expected to begin in approximately 60 days.

Quetzal CEO Bob Szczuczko stated,'The successful drilling of this well in Colombia is a major turning point for our Company and it is unfortunate that we cannot keep the Nabors rig to conduct our testing program. In the future we need to share drilling rigs of this depth capacity with our neighbors and returning the rig on time should ensure continued cooperation'.

Quetzal has a 25% working interest in the Canaguaro Block and is the operator. Partners in the project are Brownstone Ventures (Barbados) Inc. 25% WI (a wholly owned subsidiary of Brownstone Ventures Inc) and Condor Exploration Inc. 50% WI.

Tags: Quetzal Energy