Alvopetro Energy Ltd (CVE:ALV) ‘s first quarter depicted the company’s push to unlock the oil possible in its portfolio with drilling recently commenced on the first of three oil wells planned for 2015. The firm spud its first exploration well at block 182, a shallow conventional oil prospect, targeting the Agua Grande formation with additional possible in the Sergi Formation. In our perspective, success could prove to be an important turning point in the company’s development given the possible for near-term cash flow generation from oil discoveries.
Alvopetro Energy pleased to announce that 182(B1) well, located on Block 182 in the Recôncavo basin in the State of Bahia, Brazil, has discovered hydrocarbons. The 182(B1) well reached a total measured depth of 2,095 metres. While drilling, inflows of oil and solution gas were experienced into the wellbore from an over pressured hydrocarbon bearing zone at approximately 1722 m MD in the Candeias Formation. The well was controlled, the hydrocarbons were circulated out, the drilling fluid density was increased and the well was drilled to total depth, successfully cased, and cemented. Due to the formation pressures encountered, cased-hole sonic and neutron logs were run. The logs indicate the well has encountered 6 metres of potential conventional hydrocarbon pay in the Agua Grande Formation at 1900 – 1906 m MD, with an average 35% water saturation and porosity range of 10 – 14%. We plan to conduct further cased hole logging and test the hydrocarbon potential of both the Candeias and Agua Grande Formations over 72-hour initial period tests and then long-duration tests in accordance with Brazilian hydrocarbon regulations.
The well satisfies our current phase exploration work commitment and we have two additional prospects on this block.
We continue to focus significant effort on interpreting our extensive reprocessed 3D seismic database. Our conventional exploration inventory has now expanded to 21-prospects. One of our more prospective conventional oil exploration opportunities is a shallow target on Block 170, at 2,000 metres vertical depth, that we plan to drill in the second half of 2015.
We are also sourcing a larger drilling rig capable of efficiently drilling our first Bom Lugar horizontal development oil well. It is expected this rig would also be used to drill the first of two conventional oil prospects on Block 107 which are offsetting and analogous to our Bom Lugar producing field.