Canada’s Gran Tierra Energy (GTE.TO) said initial drilling results at its Moqueta-3 delineation well in Colombia indicated a significant oil column, sending its shares up 6.5 percent. Preliminary results at the well indicated net oil pay of 118 feet, up from 44 feet from the Moqueta-2 well, the company said, adding that it will begin a three-week test program to confirm fluid content and productivity of the zones.
The oil and gas exploration company also said it would drill the Moqueta-4 well to further test the extension of the discovery.
Analyst Dan Grager of Peters & Co Ltd said the importance of this well would be to test the lateral extension of the Moqueta discovery.
“They don’t know how big this find is because the three wells they’ve drilled are quite close to each other and they are down-dip. So, Moqueta-4 is going to be the well that will tell them how big this discovery is.”
Grager said he estimates an unrisked discovery of about 15 million barrels at Moqueta, with a risked number of about 8 million barrels.
Gran Tierra said its third-quarter production would fall short of its forecast, due to the disruptions in the OTA pipeline.
The company said it expects third-quarter net production, net after royalty at 13,200 barrels of oil per day (bopd), lower than its earlier estimate of 14,000-16,000 bopd.
Christopher Brown, analyst at BMO Capital Markets-Canada said the drop in production was of little concern.
“I think the idea is that despite the quarterly production being off expectations, there is enough behind-pipe opportunity to restore production to previous levels and meet expectations,” he said.
Gran Tierra said disruption at the OTA pipeline, which is operated by Colombian state oil company Ecopetrol, lead to 22 days of downtime in the third quarter. The pipeline was back in service on Sept. 20, 2010, it said.
“It is sort of an operational expectation that you’re going to have those delays periodically,” said Brown, adding that the pipeline being offline a couple of times in a year was accounted for.
The company, which owns and operates assets in South America, said current net production after royalty from all of its properties stood at about 15,000 bopd.
Gran Tierra also said it expects the construction of the 8-kilometer Moqueta to Costayaco pipeline in Colombia to begin in the fourth quarter of 2010 and long-term flow testing to start in the first quarter of 2011.
The Calgary, Alberta-based company’s shares, which have gained nearly 39 percent in value in the last three months, rose to C$7.99 before paring some of the gains to trade at C$7.69 Friday on the Toronto Stock Exchange.