Citation Resources (ASX: CTR) has flowed light oil to surface while drilling its Atzam-5 appraisal well in Guatemala through the C17 carbonate reservoir that is currently producing oil at the Atzam-4 well.
The reservoir was intersected at 2,748 feet and is estimated to be just 15 feet low to the same reservoir at the Atzam-4 well and 300 feet high to the Atzam-2 discovery well.
Given that Atzam-4 was previously expected to be sitting on the crest of the Atzam structure, the revised reservoir structure depth profile for Atzam-5 is potentially very significant for its commercial prospectivity and the global resource estimate for the Atzam Oil Field.
The true structural extent and volumetrics of the Atzam Oil Field will be clearly defined through a 3D seismic survey later this year.
In addition, material oil shows were recorded at surface while drilling through the C15 -C17 carbonates over past week.
Atzam-5 is currently drilling ahead in the C17 carbonate at 2,907 feet and is expected to reach the top of the C18 structure within days.
The Atzam-2 discovery well had flowed at over 1,000 barrels of oil per day from the C18 and C19 carbonate sections, which are the primary targets for Atzam-5.
Operator Latin American Resources, which is 60% owned by Citation, had recently successfully set and cemented the first intermediate 13 3/8 inch casing string in the well.
This was a critical operational phase due to the complex limestone geology present down to the top of the carbonate units.
It had also installed flow testing tanks and a separator unit at the well head at Atzam-5 that allows for the immediate testing of any potentially commercial carbonate zones as the well drills through the target carbonate sections.
This enables the operator to immediately commence a commercial production testing program if a carbonate zone produces material flows to surface from drilling without waiting for the well to reach its planned depth of 4,100 feet.
Atzam-5, located about 1 kilometre southeast of Atzam-4, targets the C18 and C19 carbonate reservoirs that produced strong oil shows in the producing Atzam-4 but were unable to be flow tested. It will also intersect the current producing C17 carbonate reservoir.
LAR is also planning to further open the choke on the Atzam-4 well to increase the current production rate of 170bopd from the C17 carbonate reservoir.
That the well has maintained this production rate for the last eight months on natural pressure without associated water has been encouraging.
While LAR estimates the C17 at Atzam-4 could produce more than 1,000 barrels of oil per day on an open choke, independent reservoir engineers Ralph Davis have recommended that the well be produced at an optimal production rate of 466bopd, whilst maintaining the reservoir's structure and integrity.
Atzam-5 continues to perform for Citation Resources, with the well flowing oil to surface from the C17 carbonate reservoir.
The well is now days from intersecting the target C18 and C19 carbonates and success there could provide the company with a substantial boost to production, allowing it to meet its targeted production rate of more than 600bopd.
Along with the planned 63-4 and 63-5 re-entry wells at the Tortugas Salt Dome structure, which could each add a further 200 to 300bopd to its oil production, Citation is well placed for the recent share price lift from $0.01 in February to $0.013 to lift further.
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