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Adulis Resources Inc (ADS)


Wednesday 08 June, 2005

Adulis Resources Inc

Colombian Operations Update

Adulis Resources Inc.
08 June 2005

                             ADULIS RESOURCES INC.

JUNE 8, 2005
                              CALGARY, ALBERTA

                          COLOMBIAN OPERATIONS UPDATE

Adulis Resources Inc. ('Adulis' or the 'Company') announces an operations update
on its current Colombian exploration and development program. Adulis operates in
Colombia through Solana Petroleum Exploration Colombia Limited, Adulis' wholly
owned subsidiary. The drilling programme currently consists of twelve
exploration wells, one development well and one recompletion of an undeveloped
discovery. Delays in the previously forecast drilling program, initially caused
by heavier than normal rainfall in several areas delaying location construction,
have occurred.   Subsequently, a reallocation of drilling rigs and services has
been required.

Adulis remains committed to its corporate strategy.  The Company is actively
pursuing additional exploration and production opportunities in Colombia and
looks forward to a very active drilling program during the rest of 2005 and the
first quarter of 2006 to complete the evaluation of areas already held.

Guayuyaco 1

The Guayuyaco 1 well, located on the Guayuyaco structure in the Putumayo basin
of southern Colombia, in which Solana has a 35% working interest, after
Ecopetrol, the Colombian State oil company, exercises a 30% back in right, is
operated by Argosy Energy International LLP, and has now been on long-term test
since late March with the following results:

  • Produced a gross 60,000 Bbls of oil during March through May
  • Current production 850 Bopd with a 32% water cut
  • New pump to be installed in June
  • Target gross production rate 1000 - 1200 Bopd

Guayuyaco 2

Guayuyaco 2 is the second well on the Guayuyaco structure. Solana will have a
35% working interest after Ecopetrol exercises a 30% back in right:

  • Drilling to start by the end of June
  • Initial results expected by mid August
  • Production targets similar to Guayuyaco 1.

Puma Prospect

The Puma Prospect, operated by Ecopetrol, is located in the Putumayo basin of
south western Colombia. Adulis will earn a 22.5% interest in a discovery through
a commercial agreement with Ramshorn, a subsidiary of Nabors Industries.  This
area is adjacent to the Orito field which, although it is not a direct
exploration analogy, provides nearby oil handling and transport facilities.
This area is known for its high quality reservoirs and seismic data quality.

  • The Puma well is expected to spud by the end of June 2005.
  • A drilling rig has also been identified and contracted and is being
    mobilised to the Puma location.

Guariquies Prospect

The Guariquies Project, operated by Ecopetrol, is located in the Middle
Magdelana basin and is adjacent to the Tesoro and Peroles fields. Solana will
earn a 33.75% interest in this prospect through a commercial agreement with
Ramshorn. This area has extensive oil production and transportation
infrastructure. The rig is expected to begin mobilizing in July.

Zeus Prospect

The Zeus Prospect, operated by Ecopetrol, is located in central Colombia, and is
in an updip position with respect to a previously drilled well which encountered
oil shows but failed to test the full potential reservoir section. Solana will
earn a 33.75% interest in a discovery through a commercial agreement with
Ramshorn.  This prospect is near the Velasquez field which forms part of an
extensive network of pipelines and oil handling and processing infrastructure in
the Middle Magdalena basin.

  • The Zeus prospect is among the largest undrilled prospects in Colombia and
    represents an attractive potentially high impact exploration target.
  • Efforts are well advanced to locate an appropriate rig for a deep test of
    the Zeus structure.
  • The proposed well, which will be drilled to 18,000 ft and is expected to
    take up to 135 days to drill, is expected to spud in early October , 2005.


The Bucaro 1 well, operated by Solana, is located in the Guachiria Block in the
Llanos Basin in eastern Colombia. The Bucaro 1 well tested oil at 770 barrels
per day in the 1980's however has not been commercially produced to date due to
low oil prices and unfavourable fiscal terms which existed at the time of
discovery.  Solana renegotiated the terms under which this block was held in
late 2004 and the fiscal terms and economics of the area are now attractive.

  • Field operations are underway with the former Bucaro 1 well having been
    re- entered and recompleted.  Preliminary tests have recovered sufficient
    oil to support a more extensive development.
  • The Bucaro 1 re-entry and recompletion are being carried out by a
    Colombian service contractor who is assuming the capital risk of this
    project and who will, if it is successful, recover the risk capital from
    100% of the post royalty initial oil production.  Thereafter the contractor
    will recover an amount equal to the risk capital from 50% of the post
    royalty production, leaving the remaining 50% to Solana.  After a total of
    200% of risk capital has been recovered the contractor will receive an 11 %
    royalty and leave the entire remaining production stream to Solana. Solana
    will also own the installed facilities.
  • Road construction is now in progress to allow the trucking of sufficient
    oil to establish the commercial viability of full scale production

Financial Update

Adulis' consolidated working capital decreased from $58,678,428 (Cdn) at
December 31, 2004, to $51,334,952 (Cdn) at March 31, 2005, largely due to the
cash outflow related to the Company's exploration activities in the three month
period ended March 31, 2005.

The Company's cash balances at March 31, 2005, amounting to $50,802,041 (Cdn)
and $900,000 (Cdn) in restricted cash are committed to the Company's planned
capital expenditure program in Colombia, which will result in  eight
exploration wells and one  development well to be drilled in the remainder of
2005 and the first quarter of 2006.  The Company expects to have sufficient
working capital to meet these commitments.

Adulis Resources   Stephen Newton     [email protected]   + 0057 1 629 1636
                   Ray Antony         [email protected]                   + 00 403 266 7512
                   Company website:
Pelham Public      James Henderson    [email protected]        +4402077436673
                  Charles Vivian      [email protected]         +4402077436672

                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                             

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