Asset Poza Rica-Altamira

Block

ArenqueE X E C U T I V E S U M M A R Y

Asset Poza Rica-Altamira

1. Introduction

2. Basin description

3. Main characteristics

4. Exploration and development history

5. Production by field and reserves

6. Facilities and hydrocarbons management

7. Drilling practices

I N D E X

This block is located in Mexican territorial waters on the continental shelf at 30km east of

the city of Tampico, state of Tamaulipas. It covers an area of approximately 2,035 Km² and

it contains the fields Arenque, Lobina, Jurel, Merluza and Náyade. Geologically it is located

on the east portion of the Tampico Misantla basin. In the Arenque block fifty one (51)

wells have been drilled, of which seventeen (17) are operating, thirteen (13) are shut-in

and twenty one (21) are plugged & abandoned.

Current production is 5,600 bpd of oil, 2,500 bpd of water and 22 MMcfd of gas. The

crude produced is heavy to light with density varying from 19 to 32° API. Current reservoir

pressure varies from 300 to 576 Kg/cm2. The production driving system is natural flowing.

The reservoirs in the area are a combination of structural and stratigraphic traps

developed in the border of a high rift block (basement highs.) In these borders a sequence

of sandstones and oolitic banks were deposited from the Upper Jurassic San Andres Play.

In the area there are three (3) seismic (3D) surveys covering 100% of the block. The

surveys are of excellent quality: Arenque-Lobina Q-marine depth-processed cube, Sardina

time-processed cube and Jurel depth-processed cube.

Asset Poza Rica - Altamira INTRODUCTION

Location of the Arenque Block

BASIN DESCRIPTION

The Tampico-Misantla Basin is located west side of Mexico and includes the south end of

the state of Tamaulipas, the central portion of the State of Veracruz, portions of the west

side of the states of San Luis Potosi and Hidalgo, the north portion of the state of Puebla

and the continental platform to the bathymetry of 200 meters.

The crystalline basement is made up of igneous and metamorphic rocks ranging from the

Permian to the Middle Jurassic. In stratigraphic column of the Tampico-Misantla Province

the following tectonic sequences are recognized:

The first tectonic sequence (Synrift) begins in Triassic with the deposition over the

basement of continental clastic rocks of alluvial and fluvial environments with some lava

flows of the Huizachal Formation of the Late Triassic and Hettangian age. It is followed by

a marine transgressive sequence of sandstones and shales of the Huayacocotla Formation

during the Lower Jurassic Hettangian-Pliensbachian. In the Middle Jurassic the continental

environments re-appear with the clastic rocks of the Cahuasas Formation. A new

transgression allowed the deposition of oolitic limestone in the lower portion of the

Huehuetepec Formation.

Location of the Block Arenque in the Tampico-Misantla Basin.

Block Arenque

Asset Poza Rica - Altamira

Activo Integral Poza Rica - Altamra

Sandy limestones and shaly bioclastic rocks of the Tepexic Formation were deposited over

these formations in the Callovian age. It was followed by the deposition of deep water shaly

and carbonate limestones of the Santiago Formation when the maximum transgression was

reached during the Oxfordian age. Around of highs of the basement, carbonate ramps

developed and, in their internal side, were deposited the shaly-sandy limestones of the San

Pedro Formation and the oolitic limestones of the San Andres Formation together with their

lateral equivalents of the Chipoco Formation and basin sediments of the Taman Formation.

These facies reached their maximum development during the Kimmeridgian age covering the

Tampico-Misantla basin, mainly during the second sea-level lowering. In certain zones it can

be observed the abrupt change of the Santiago Formation to the Chipoco or San Andres

Formation.

The shaly and carbonate limestones of the Pimienta Formation covered regionally the

formations Taman, Chipoco and San Andres during the Tithonian. Toward the end of the

Jurassic a thin packet of clastic rocks are deposited over the Pimienta Formation. These

sediments make up the La Casita Formation and their source is the erosion of exposed

portions of the crystalline basement.

The second tectonic sequence (Passive Continental Margin) begins with the deposition of

oolitic and bioclastic limestones of lower member of the Tamaulipas Formation of the

Berriasian-Valanginiano age. Towards the area of Tuxpan, however, there was the

development of a reef represented by the limestones of the El Abra Formation bordered by

slope sediments of the Tamabra Formation.

Towards the end of the Cenomanian this platform has an extended surface exposure. With

the following transgression, the shallow-water carbonate sedimentation is re-established

with the relative rise of the sea level. The pelagic carbonate limestones of the Agua Nueva

Formation of Turonian age are deposited over the formations El Abra, Tamabra and Upper

Tamaulipas.

BASIN DESCRIPTIONAsset Poza Rica - Altamira

Later shaly limestones with intercalations of bentonite of the San Felipe Formation were

deposited followed by marl, shaly limestones and calcareous shales of the Mendez

Formation mark the end of the Passive Continental Margin tectonic sequence.

The third tectonic sequence (Foreland Basin) is characterized by a change from carbonate

to terrigenous sedimentation. The terrigenous sediments were defined by López-Ramos

(1956) as being part of the Tampico-Misantla Basin.

The bathymetric profile had the tendency to be of a ramp, with relatively narrow zones,

and in which the costal systems changed to a prodeltaic or slope zone with predominant

transport of sediments by turbidity currents, flows of waste rock and landslides.

List of formation abbreviations:

Mendez KmendezSan Felipe KsfAgua Nueva KanUpper Tamaulipas KtsLower Tamaulipas KtiUpper Jurassic JsUpper Jurassic San Andres Jsa

Depositional Model Middle Cretaceous (Albian-Cenomanian)

BASIN DESCRIPTIONAsset Poza Rica - Altamira

MAIN CARACTERISTICS

The geological column from the bottom to top, begins with the Paleozoic crystalline

basement overlaid by Jurassic and Lower Cretaceous calcareous rocks. These in turn were

overlaid by sediments from the border of the Middle Cretaceous platform (reefs of the El

Abra Formation) that change facies laterally towards the slope (Tamabra Formation) and

towards the interior of the of the platform (post-reef facies.) These same sediments

overlay the Upper Cretaceous rocks towards the interior of the platform. A clear

discordance can be noted in the reef growth zones that set the contact of the Middle

Cretaceous with the clastic sediments of the Tertiary and which make up the remaining of

the geological column till the Quaternary period.

Structurally the border of the carbonate rocks platform is characterized by major gravity-

induced listric faults that cut the Tertiary sediments dipping towards the basin and joining

in a main level (shaly interval of the Basal Tertiary.)

The area reservoirs are a combination of structural and stratigraphic traps developed in

the high of the block. The area is covered completely by 3D seismic acquired in

September 2002 and processed in November 2002 (Post-Stack Migration.) In May 2005

the seismic data went through a Pre-Stack Migration processing.

Towards the end of the Cenomanian this platform had an extended surface exposure.

With the following transgression, the shallow-water carbonate sedimentation is re-

established with the relative rise of the sea level. The pelagic carbonate limestones of the

Agua Nueva Formation of Turonian age are deposited over the formations El Abra,

Tamabra and Upper Tamaulipas. Later shaly limestones, with intercalations of bentonite of

the San Felipe Formation, were deposited followed by the sediments of main economic

interest that include the calcareous platform rocks of the Jurassic and Cretaceous.

Asset Poza Rica - Altamira

These carbonates are truncated by an erosional regional discordance with Tertiary and

Quaternary clastic sediments deformed by extensional faults. The traps are a combination

of structural and stratigraphic. There are three (3) productive levels:

The Upper Jurassic San Andres reservoir (Jsa), made up of oolitic limestones with good

porosity (18%) contributes the majority of the production (oil of 24 to 32°API.) The

average pay of the reservoir is eighty (80) meters and its average depth is around 3,500

meters.

The Lower Cretaceous Tamaulipas Formation reservoirs “A” and “B”, made up of fine-grain

limestones with inter-crystalline porosity of 12% (dolomitization) and fractures are the

other productive levels. They produce oil of 22°API. The range of thicknesses of the two

reservoirs is 10 to 30 meters.

Sedimentary Model Arenque Field

Asset Poza Rica - Altamira MAIN CARACTERISTICS

Pks bioclasticsOolitic Banks

Pks Oolites &

bioclastics

The model of the Arenque Field, that in its first stage is focused exclusively on the Jurassic

San Andres reservoir, has been studied by many authors and it has been divided in six (6)

para-sequences (KS4, KS3, KS2, KS1, KI2 y KI1) according to their lithology and

depositional environment. With the objective to construct the geologic model the 6

sequence were condensed as follows: Jks4 corresponds to the oolitic-sandy Grainstones

(KS4), Jks3 is a Grainstone (Bank) oolitic (KS3), Jks2 is made up of Peletoids (KS2) and Jks1

is the combination of sandy limestones and the sequences KI1 and KI2 of mudstones and

conglomeratic sandstones. Because of the lack economic value and to simplify the model

was condensed in Jks1 and as the base for the model it was chosen the top of the

crystalline basement obtained using seismic.

Asset Poza Rica - Altamira MAIN CARACTERISTICS

The block includes the producing fields Arenque, Lobina, Jurel, Merluza y Náyade. The

Arenque field, the main producer, is located a 31 km East of the city of Tampico, state of

Tamaulipas. It was discovered as an oil and associated gas producer in 1968 with the

drilling of the Arenque-1 well; it was completed on an interval of carbonate rocks of the

Lower Cretaceous. Well Arenque-2 was completed in the San Andres Jurassic interval in

1968. The field development begun in 1970 with the installation of offshore platforms

Arenque “A” and Arenque “B” and continued in 1974 with the installation of platform “C”.

In 1980 a waterflood project was started exclusively from platform Arenque “B”. In 1998 it

was suspended because of high incidence of leaks in the onshore water aquifer.

Currently sixteen (16) wells are producers.

There are three 3D seismic cubes that cover 100% of the block. The largest is the time-

processed Sardina cube, the second is depth-processes Jurel cube and the third is the Q-

Marine depth processed Arenque-Lobina cube. Additionally there is 2D seismic lines

which are practically not used because of excellent quality of the 3D surveys.

Typical Seismic Section

EXPLORATION & DEVELOPMENT HISTORYAsset Poza Rica - Altamira

EXPLORATION & DEVELOPMENT HISTORY

The exploration in the block started in 1968 with the drilling of well Arenque-1 with the

objective located in a high of the basement. However the Jurassic San Andres (Jsa), was

not found. Instead the well produced from Lower Cretaceous (Kti A). It was not until the

70’s that well Arenque-2 was drilled and found oil on Jurassic San Andres (Jsa).

There are currently seven (7) prospects evaluated; together they define average

oil resources of 277 MMb of crude equivalent.

Location of the strategic prospects evaluated

Table of strategic prospects defined for the Arenque Block

Coordinates

UTM

X

Coordinates

UTM

y

Hydro-

carbon

Probability

of Exit

(%)

Water

Level

(m)

Depth of

Objective

(m)

Potential

Resources

Oil Equivalent

(MMbe)

P10

Potential

Resources

Oil Equivalent

(MMbe)

Average

Potential

Resources

Oil Equivalent

(MMbe)

P50

Potential

Resources

Oil Equivalent

(MMbe)

P90

Beluga-A 646,125 2,462,881Light Crude

0.37 45 3,280 53.2 22.9 15.1 4.3

Camarón-B 638,516 2,467,651Light Crude

0.45 45 2,860 77.1 33 22.3 5.9

Jurel-C 637,251 2,453,444Light Crude

0.32 48 3,050 149.8 58.8 31.3 6.6

Lobina-D 658,954 2,455,141Light Crude

0.36 48 3,490 37.6 17.2 12.4 4.1

Ostrácodo-E 646,050 2,456,368Light Crude

0.28 46 3,330 167.1 65.4 34.4 7.1

Plancton -F 651,758 2,455,169Light Crude

0.37 50 3,370 22.4 10.9 8.5 3.2

Salmón-G 658,326 2,464,432Light Crude

0.3 70 3,640 175.2 69.2 37.4 8

Asset Poza Rica - Altamira

PRODUCTION BY FIELD AND RESERVES

The production of the Arenque comes from the Arenque and Lobina fields. In 1970 the

development of the field Arenque was started with platforms “A” and “B” and in 1975

well were drilled in platform Arenque “C”. In 1977 the maximum production of 27,600

bpd was reached. In the same year the Jurassic San Andres reservoir reached the bubble

point. In 1980 waterflood of Jurassic San Andres was started and in 1984 the lowest

production of 5,220 bpd was reached. In 1992 production begun from the Lower

Cretaceous Tamaulipas Formation (Kti) reservoir “A” with the well Arenque-28. In 1998

waterflood was stopped after cumulative injection of the 15.4 MMb of water. In the year

2000 drilling and production was started from side track horizontal wells and in 2006 the

production from the well Lobina-1 was added. In 2009 commercial production was

obtained from the Cretácico Tamaulipas Inferior (Kti) “B” reservoir.

Production History of the Arenque Block

Asset Poza Rica - Altamira

The reserves of the Arenque block are the sum of the reserves of the fields Arenque,

Lobina and Jurel. The block has proved reserves of 76 MMboe and probable reserves of

17 MMboe. Prospective resources for the block are 994 MMboe.

In the last few years the only activity in the block is the re-entries in well Arenque 46. On

May 22, 2010 a window mill was open at 3,299 meters (TD) and a side-track wellbore was

drilled with the well reaching the total depth of 4,117 meters in a open-hole of 4 1/8”.

Block Arenque Reserves

Remaining Reserves (as of January1, 2011)

1PMMboe

2PMMboe

3PMMboe

76 93 101

Map and section of re-entry trajectory well Arenque-46

PRODUCTION BY FIELD AND RESERVESAsset Poza Rica - Altamira

From November 29 to December 2, 2010 a flow-test was done for well Arenque-46,

flowing through three (3) well chokes, recording the flowing bottom hole pressure

achieving the following results:

With this information well simulation study was done and using nodal analysis it was

determined that the optimal exploitation diameter is 10mm (25/64”) that will assure that

the well will perform within the critical flow and that a flow rate of 1,120 can be obtained.

Currently the field produces approximately 5,600 bpd of oil and 22 MMcfd of gas from the

fields Arenque and Lobina. There are four (4) offshore platforms and thirty five (35) wells

(17 operating, 13 shut-in and 10 plugged). There are five (5) offshore oil/gas pipelines of

12” diameter; one with the length of 5.4 Km links platforms Arenque “A” and Arenque

“B”; one with the length of 3.1 Km links platforms Arenque “C” and Arenque “B”; one

with the length of 14.7 Km links platforms Lobina “A” and Arenque “B”. In the Arenque “B”

platform the hydrocarbons are concentrated and sent to the on-shore Arenque Battery

using the other two 12” oil/gas pipelines, of 29.8 Km and 32 Km in length.

Data from flow-tests of the re-entry of well Arenque-46.

Date Choke Pressure atWellhead(Kg/cm

2)

Flowing Bottom-Hole Pressure

(Kg/cm2)

Oil Rates(bpd)

% Water

Gas Rates (MMcfd)

GOR (m

3/m

3)

Nov-29- 10 16/64 (6.35mm) 124 268 453 0 0.95 374

Dec-01-10 20/64 (7.94mm) 104 266 781 0 1.12 256

Dec-02-10 25/64 (9.93mm) 88 255 1120 0 1.46 230

PRODUCTION BY FIELD AND RESERVESAsset Poza Rica - Altamira

Infrastructure Facilities and Hydrocarbons Management

Facility Wells Pipelines Arenque Battery Land Pipelines

Arenque "A"

4 Operating 12"Ø x 5.4 Km Arenque "A" Arenque "B"

2 Storage Tanks of 55,000 b each

2 Storage Tanks of 10,000 b each

3 High-pressure Separator of29 de Mbpd y 50 MMcfd each

3 Low-pressure Separators of29 Mbpd y 26.5 MMcfd each

2 Gas Rectifiers of 90 and 30 MMcfd

Oil pipeline of 16" Ø x 2.2 Km, from Arenque Battery -

Madero Refinery

Gas pipeline of 12" Ø x 1.4 Km, from Arenque Battery –

Arenque Central Gas Processing facility

Water pipeline of 10" Ø x 27 Km, from Arenque Battery to

the Tamaulipas Collecting Center in Constituciones

3 Shut-in

3 Plugged

Arenque "B"

7 Operating 5 Shut-in

12"Ø x 29.8 Km Arenque "B" - Bat. Arenque 12"Ø x 32 Km Arenque "B" -

Bat. Arenque

Arenque "C"

5 Operating 12"Ø x 3.1 Km Arenque "C" Arenque "B"

4 Shut-in

1 Taponado

Lobina

1 Operating 12"Ø x 14.7 Km Lobina "A"-

Arenque "B"1 Shut-in

1 Plugged

Summary Table of Infrastructure Facilities

FACILITIES & HYDROCARBONS MANAGEMENTAsset Poza Rica - Altamira

DRILLING PRACTICES

Drilling is the costliest activity in the block and therefore it was necessary the use of new

tools to allow the gathering, in real-time, of information on the main drilling parameters

and the formations that were cut. It required the utilization of directional long-range

drilling and the use of larger drilling rigs to be able to drill longer wells.

During drilling, operational problems have arisen due to complex subsurface geology, low

pressure and high temperature of the reservoirs, normally located at depth below 3000

meters.

Below are basic drilling designs showing the well mechanical status diagram for wells in

the Arenque block.

Wellbore Diagram - Directional Type

143 m30”

mdbmr = Length of wellbore below rotary table

1287 m

3551.5 – 3559 mDISP.: 20 -JUL -71, 13 CPMESTIM.: 23 -JUL -71

I

Casing 13 ”, J -55, 54.5 lb/in 405 m

Casing 9 ”, N -80, 47 lb/i 1998 m

3501 mCasing 7”, N-80, P-110, 32 lb/in

Casing 4 ½ ” at 3432 m

Sleeve 2 at 3390 m

Packer 415 -D at 3400 m

Casing 4 ½ ”, P -110, 15.1 lb/in

3571 m

3578 m

T.D. 3579 m

2536 m

Safety Valve

5/8

3/8

Asset Poza Rica - Altamira

135 m30”

Casing 7 5/8”, N-80,

P-110, 39 Lb/ft3829 m

TD 3833.3 m

Casing 16”, J-55, 84lb/ft402 m

Casing mouth 7 5/8”

at 1506.5 m

Casing 10 3/4”, N-80, P-110,

51 Lb/ft at 2205 m

3802 m

3420 m

1363 m

Baker Plug K-1, 10 3/4” at 460 m

EZ-DRILL, 10 3/4” at 540 m

Casing cutter of 10 3/4” at 475 m

Casing 13 3/8”, HD-521, J-55,

54.5 Lb/ft at 778 m

Tie-Back 7” at 2382.4 m

Casing 9 5/8”, Antares, N-80

47 Lb/ft at 2600 m

Sleeve CMD 2 7/8”

EUE tubing at 3882 m

Baker Packer SC-2P, 7” at

3892.14 m

Casing 7”, HD-521, P110,

32 Lb/ft at 4183

Cement retainer B.L.

casing 5” at 4005 mCasing 5”, P-110

18 Lb/ft, at 4261 m

OPEN HOLEOF 4 1/8” AT 4334 m

II

I

Fish mouth at 4229 m

TD at 4262 m

Tubing 3 1/2” MVAM, 9.2 Lb/ft

Security Valve, 3 1/2” at 150 m

Tubing 2 7/8”, N-80, 6.4 Lb/ft, Antares-

Combination MV, N-80, 6.5 Lb/ft-

mdbmr = length of wellbore below rotary table

Cut Casing 10 3/4” at 445 m

Fish: drill bit, logging cable

and fishing spear (0.5m)

DRILLING PRACTICESAsset Poza Rica - Altamira

Wellbore Diagram – Re-entry Type

Integral Asset Poza Rica-Altamira

June 2011

Block

ArenqueE X E C U T I V E S U M M A R Y