TN PETRÓLEO

London-listed GeoPark (LSE: GPK) has reported a new natural gas discovery after testing the Cerro Sutlej-1 exploration well on the Fell block in southern Chile.

Following fracture stimulation, the well is producing 4.3Mf3/d (121,800m3/d) of natural gas from the Springhill formation at a depth of 3,025m, GeoPark said in a statement.

GeoPark built a gas pipeline after the successful test to tie the well into its gas treatment and compression plant. GeoPark is selling the natural gas a to methanol plant 100km from the Fell block owned by Canada`s Methanex (Nasdaq: MEOH).

GeoPark drilled the Cerro Sutlej 1 well on a new structure that it defined following the interpretation of its 3D seismic program conducted in 2007, according to the statement.

"The discovery provides encouragement for our inventory of other drilling opportunities delineated from GeoPark`s 2007 3D seismic program and interpretations," GeoPark chairman Gerald E O`Shaughnessy said in the statement.

"For example, Cerro Sutlej has an adjoining structure defined by 3D seismic which now looks to be another promising prospect that we will drill during this year."

Cerro Sutlej 1 is the fifth well that GeoPark has drilled and put into production in Chile since its long-term drilling program began in June 2007. Two other new wells have tested hydrocarbons but require further testing or remedial operations before being put onstream.

Current gross production from GeoPark`s blocks in Chile and Argentina is roughly 3,380boe/d with net production of 2,980boe/d.

GeoPark plans to invest US$57mn in 2008 in Chile and Argentina to drill 17-20 new wells and construct the necessary production and infrastructure facilities.

Methanex announced in March it would restructure its operations in southern Chile because of the continued natural gas cuts from Argentina. Thirty-nine employees, or 15% of Methanex`s workforce in Chile, were let go as a result.

The four Methanex plants in southern Chile have been running at 30% capacity due to the gas cuts, a rate not expected to rise in the short term.

Methanex Chile`s fourth quarter 2007 output totaled 288,000t compared to 766,000t in 4Q06. Production capacity is 960,000t.

The company wants to restore complete operations by 2011 and plans to invest up to US$200mn through 2009 to finance E&P in southern Chile.