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Oil and Gas Energy News Update

Tuesday, September 13, 2011

Quetzal to Spud Llanos Well in October

- Quetzal to Spud Llanos Well in October

Tuesday, September 13, 2011
Quetzal Energy Ltd.

Quetzal provided the following update on operations:

Block 27, Llanos Basin

As previously announced, Quetzal completed a 220 square km 3D seismic survey of Block 27 in 1Q 2011 and then followed that up with an additional 54 square km survey in 2Q 2011. Merge, analysis and interpretation of this seismic has been completed and management has identified 4 drillable prospects on the block.

On August 10, 2011, Quetzal received its blanket environmental permit paving the way to proceed with the drilling of its first well on Block 27. Construction of the location began on August 29, 2011, and the Company expects to spud this first well with a rig contracted from Saxon Energy Services in the second half of October. Once drilling begins, management expects to reach target depth of 10,000 feet in 45 days.

Prospective targets include the oil bearing intervals in the Mirador and Une Formations, with the Carbonera formation representing a secondary target.

Quetzal pays 50% of cost and has a 45.275% revenue interest in this block before payout, and a 34.25% interest following payout.

Block 21, Llanos Basin

A 95 square kilometer 3D seismic program has been completed on Block 21, and management is near completion of its analysis and interpretation. Preliminary evaluation has identified 4 potential prospects of interest on Block 21 with further detailed analysis required.

On August 3, 2011, Quetzal filed for its environmental permit on Block 21 and is awaiting approval. Under contractual commitments to the ANH, and by the terms of its farm-in agreement, Quetzal and their partner, Brownstone Ventures, must drill two wells by September 12, 2012. Assuming environmental approval is received in a timely fashion, the Company expects to commence wellsite construction in 1Q 2012, and drill two wells in 2Q 2012.

Projected well depths at Block 21 are 8,000 feet.

Quetzal pays 50% of cost and has a 45.50% revenue interest in this block before payout, and a 35% interest following payout.

Canaguaro Block

A long term production test began on May 4, 2011 with an ESP set at approximately 6,000 feet depth, approximately 8,000 feet above the producing Mirador formation. Since that time, Quetzal has averaged approximately 400 barrels of oil per day and has witnessed the water cut go from and average of 18% in May to 33% in August. Initial reservoir pressure was registered at approximately 5,850 psia in May, and management has witnessed some decline in bottom hole flowing pressure since commencement of the long term test. In late August, Quetzal shut in the Canaguay 1 well for 6 days to conduct a pressure build up test. Over that short period, well pressure returned to within 100 psia of the May pressure indicating that reservoir pressure depletion is not significant. Given that the perforations are only 30 feet above the plug back depth, management believes that sand production is likely causing a restriction in flow, and reduced bottom hole flowing pressure. The Company and its partners now plan to service the well by conducting a cleanout of the well, replacing the ESP, and placing the new ESP at a deeper depth in the well closer to the producing zone. It is management's expectation that this will lead to increased fluid production and a resultant increase in oil production as well. This work is expected to be completed by November 1 and is budgeted at a net cost to Quetzal of $250,000.

Quetzal has a 25% working interest in the Canaguaro Block and is acting as operator of the well.

Block 36

The acquisition of 109 square kilometers of 3D seismic on Block 36 has been completed and analysis and interpretation continues. Drilling of one well is required by February 2012 and the Operator, Montecz continues to evaluate options to meet activity requirements of the ANH. Quetzal pays 20% of cost and has a 18.2% revenue interest in this block before payout, with a 14% interest following payout.

Guatemala Update

As part of Quetzal's ongoing strategy to maximize shareholder value, the Company continues to evaluate strategic alternatives. The Company is actively evaluating options including selling the Guatemalan assets or soliciting third party joint venture partners to assist in developing the Guatemala blocks.

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EP Passes Resolution on Tougher Offshore Drilling Regulations

- EP Passes Resolution on Tougher Offshore Drilling Regulations

Tuesday, September 13, 2011
Rigzone Staff
by Karen Boman

The European Parliament (EP) on Sept. 13 passed a resolution that would only allow development of oil and gas fields offshore Europe if companies have prepared an adequate emergency plan and has sufficient funds to repair possible damage to the environment.

According to the resolution, passed with 602 votes in favor, 64 against and 13 abstaining, site-specific plans for drilling, which would also require approval by the relevant member state before operation begins, would better protect the environment. The resolution is a means of influencing new draft legislation to be tabled by the European Commission this autumn.

"These emergency plans should identify potential hazards, assess pollution sources and effects and outline a response strategy in the even of an accident," according to a statement by the European Parliament.

The resolution also calls for a provision requiring oil and gas operators to show in the licensing procedure that they have sufficient funds to repair any harm done to the environment as a result of their activities. It also has been suggested that the scope of the polluter pays principle and strict liability should be extended to cover all damage done to marine waters and biodiversity.

While members of European Parliament are unsure if establishing a regulator for all offshore operations would be bring enough value to justify diverting "scarce" regulatory resources from national authorities, they agree that the European Maritime Safety Agency should coordinate responses in the event of an accident.

Parliament also proposes that whistleblowers be protected, enabling employees to declare any security breaches or risks anonymously with fear of harassment.

The resolution is in response to a Commission consultation paper issued last October in the aftermath of the Macondo oil spill in the Gulf of Mexico in April 2010. It also follows on from an European Parliament resolution in October 2010 on European Union action on oil exploration and extraction in Europe.

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Anglo-Turkish Genel Energy Increasing Presence in Northern Iraq

- Anglo-Turkish Genel Energy Increasing Presence in Northern Iraq

Tuesday, September 13, 2011
by Charles Kennedy

Anglo-Turkish Genel Energy, soon to be led by former BP CEO Tony Hayward, is seeking to expand its presence in northern Iraq.

Genel Energy, owned by Turkish businessman Mehmet Emin Karamehmet, is seeking a major role in the development of the vast reserves of oil in the Kurdish autonomous region of northern Iraq.

Speaking to Turkey's Hurriyet newspaper Hayward said, "The only approval we need is from the Kurdistan Regional Government, and we expect that approval to come before the end of September. All of the indications in Kurdistan show that things are only going to get better. I think this is a good time to invest in the region."

Hayward also expressed his belief that a "pragmatic realism" now dominated relations between the Kurdish regional government and Baghdad, adding that eventually, the Kurdish region will have "a significant say" in what is going to be finally approved in Iraq's expected hydrocarbons law noting, "This means (a company) can invest. "(The two governments) have agreed to revenue-sharing mechanisms. Payments are being received and I think all indicators show that things are only going to get better. There will be some bumps in the road, but the train and its direction are clear."

(Charles Kennedy is Deputy Editor of The original article appears here.)

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TGS Launches Multi-Client Survey in Labrador Sea

- TGS Launches Multi-Client Survey in Labrador Sea

Tuesday, September 13, 2011
TGS-NOPEC Geophysical Co. ASA

TGS has commenced a new 22,000 km multi-client 2D survey offshore Newfoundland in the Labrador Sea in partnership with PGS.

The new seismic data is being acquired by the M/V Sanco Spirit and utilizes the PGS GeoStreamer® technology. Data acquisition will continue through 3Q 2011 and the vessel will return in 2012 to complete the survey. The survey area is north of oil discoveries including Hibernia, Hebron, Terra Nova and White Rose. The seismic survey covers some areas currently nominated in the Newfoundland and Labrador Offshore Petroleum Board’s call for bids (NL-11-03).

"It is important for TGS to return to Eastern Canada after a decade and add data coverage in an area where there is little modern seismic data available to the market. Eastern Canada remains one of the most promising deepwater exploration arenas in the world and we are excited to be a part of it," commented Stein Ove Isaksen, Senior VP North & South America for TGS.

Initial data will be available to clients during 4Q 2011. The survey is supported by industry funding.

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