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  • Citation Resources Targets More Oil Production With New Atzam Well 0 comments
    Nov 20, 2013 11:39 PM

    Citation Resources (ASX: CTR) is poised to spud within the next few days its Atzam-5 development well in Guatemala and has completed another oil sales contract for the project.

    Atzam-5 is located about 1,100 metres southeast of the Atzam-4 production well and will test the same carbonate reservoir intervals.

    These include the primary objective C18 and C19 carbonate sections that generated strong oil shows during drilling but which were unable to be flow tested in Atzam-4.

    This will be a major objective for the planned flow testing program for Atzam-5.

    The producing C17 carbonate zone at Atzam-4 will also be tested.

    Like Atzam-4, the Atzam-5 well will be drilled to a target depth of approximately 4,100 feet

    Oil Production and Sales

    Operator LAR has recently completed a new oil sales contract this week with the sale and delivery of a further 1,100 barrels of oil to Perenco Guatemala on the same terms as previous sales, generating pre-tax netbacks of $60 a barrel.

    LAR, which is 60% owned by Citation, continues to produce oil from the Atzam-4 well at a highly restricted rate to maintain the reservoir integrity, and following a short shut in for well head maintenance production has recommenced at about 120 barrels per day from natural reservoir pressure.

    The well is maintaining a relatively constant well head pressure of approximately 300 psi with no water production to date.

    LAR plans to increase the choke gradually over the coming months in order to establish the optimal production rate for this producing carbonate section while maintaining reservoir integrity.

    Independent reservoir engineers Ralph Davis had previously recommended that the well be produced at an optimal production rate of 466bpd to maintain the resevoir's structure and integrity.

    Analysis

    The upcoming Atzam-5 well is exciting for Citation Resources as it targets two carbonate sections that had strong oil shows, but were not tested in Atzam-4.

    Success would add another producing well to the company's belt and allow it to meet its targeted production rate of more than 600bpd.

    There is further upside to the Atzam oil field with an unexplored salt dome, which will be tested by two wells in early 2014, and anticline structures.

    These along with Atzam-5 are catalysts for share price growth as the company builds its oil production profile.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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