Annual Report 2007 - Global Energy Development

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06 Vice Chairman and Managing Director’s reviewGlobal Energy Development PLCAnnual report 2007Vice Chairman and Managing Director’s review continuedAerial viewof the PaloBlancoproductionfacilities withinthe Alcaravancontract inColombiaProductionfacilities at thePalo Blancofield within theAlcaravancontract inColombiaOverview of contracts and activitiesThe Company currently holds five contracts in Colombia, onecontract in Peru and one contract in Panama. The Company iscurrently fully compliant with the terms of each of thesecontracts.During 2007, the Company undertook drilling at the ColombianLuna Llena contract. The first well, Luna Llena 1, tested freshformation water with small traces of hydrocarbons. While thesecond well, Luna Llena 2, proved the existence of a productivehorizon and possibly significant reserves, an independenttechnical study indicated that a major portion of these reserveswere located underneath or in close proximity to the Meta Rivermeaning a very capital intensive work programme would beneeded to potentially realise these reserves and that commercialdevelopment would be very high risk. Although the Companyexceeded the capital investment obligations for the initial phaseof the contract, the complications resulting from the location ofthe reserves and potential environmental restrictions, theunexpected additional capital requirement and very restrictiverainy season resulted in the Company not being able to meet allof the specific work commitments within the time periodprovided for under the contract. As a result, as at 31 March 2008the Company no longer held the contract. The Luna Llenacontract, however, accounted for no reserves within the 2007Reserve Report and only 341,000 BOE of 3P reserves in the2006 Reserve Report.During 2007, the Colombian Los Sauces contract was alsoterminated and relinquished to the National HydrocarbonsAgency of the Republic of Colombia (“ANH”) as the Companywas unable to secure a rig due to industry-wide equipmentavailability constraints and therefore unable to complete its workobligations under the contract. The Los Sauces contractaccounted for none of the Company’s reserves in either the2006 or 2007 Reserve Reports.Drilling equipment for the Boral 1 wellwithin the Rio Verde contract in Colombia
07 Vice Chairman and Managing Director’s reviewGlobal Energy Development PLCAnnual report 2007Productionfacilities at theTilodiran fieldwithin the RioVerde contractin ColombiaTilodiran fieldwithin the RioVerde contractin ColombiaIn relation to the Peruvian Block 95 contract, the Company isawaiting the environmental permit required to undertake drilling.Once this is obtained, the Company will proceed to finalise thedetails of the drilling programme with the first obligation wellcontractually required by late 2009.The Company signed the Panamanian Garachine contract duringJune 2007, the first hydrocarbons contract the Panamaniangovernment had signed since 1990. The Company is onschedule with the currently required geological and geophysicalwork obligations and anticipates completion of all phase 1requirements on or before November 2008.Since the end of 2007, the Company has experienced some fieldunderperformance at some of its older fields, predominately atthe Palo Blanco field within the Colombian Alcaravan contract.The field underperformance is partially due to an increasingpercentage of well downtime due to surface mechanicalconditions and also delays caused by the lack of rigs to repairdown hole problems. This resulted in average net production forthe first quarter of 2008 of 982 barrels of oil per day (“bopd”)versus 1,126 bopd for 2007. The Company is currently addressingthe Palo Blanco field power generation facilities issues whichhave been the major source of mechanical downtime. In May2008, production has been restored to approximately 1,000bopd net to the Company.The management believes that the current two-well drillingprogramme at the Colombian Rio Verde contract has thepotential to significantly enhance current production levels. TheRio Verde contract contains the Tilodiran field containing theTilodiran 2 well which is currently producing 500 net bopd andhas outperformed original decline rate projections resulting inRyder Scott assigning a 30% increase in the Tilodiran field provedreserves for 2007. The second of the two wells to be drilledback-to-back is the Tilodiran 3 well, a direct offset to the Tilodiran2 well and is classified by Ryder Scott as a proved, undevelopedlocation. The first well, the exploratory Boral 1 well, has nowbeen drilled vertically to a total depth of 12,340 feet, productioncasing has been set and initial testing is underway to evaluate theGacheta and Ubaque formations, with both these formationspresent in the Tilodiran field. The Boral 1 well is structurally updipfrom the Rio Verde 1 well which was drilled several years ago bya previous operator. Ryder Scott has assigned a total of eightpossible drilling locations to develop the Boral field based uponseismic and the Rio Verde 1 well log information.Stephen VossVice ChairmanStephen NewtonManaging Director8 May 2008
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Page 3 and 4: 01 Highlights 2007Global Energy Dev
Page 5 and 6: 03 At a glanceGlobal Energy Develop
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Page 11 and 12: 09 Directors’ biographiesGlobal E
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Page 15 and 16: 13 Directors’ reportGlobal Energy
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Page 19 and 20: 17 Consolidated income statementGlo
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57 Directors’ reportGlobal Energy
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59 Independent Auditors’ reportGl
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Corporate directoryDirectorsMikel F
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Annual Report 2007 - Global Energy Development

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