PERUPETRO S. A.

TUMBES AND TALARA BASINS HYDROCARBON EVALUATION

by

Basin Evaluations Group Exploration Department

Elmer Martnez Senior Coordinator Justo Fernndez (Project Leader/

Senior Petroleum Geologist) Elmer Martnez (Senior Geophysicist)

Ysabel Caldern (Geologist) Wilber Hermoza (Structural Geologist) Carlos Galdos (Geophysicist)

December 2005

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TABLE OF CONTENTS TABLE OF CONTENTS.............................................................................................. 1 FIGURES..................................................................................................................... 3 TABLES ...................................................................................................................... 7 ENCLOSURES ............................................................................................................ 7 APPENDICES.............................................................................................................. 8 EXECUTIVE SUMMARY......................................................................................... 10 1.0. INTRODUCTION ............................................................................................... 12

1.1. Regional Basin Description.............................................................................. 14 1.2. Bathymetry ...................................................................................................... 15

2.0. PREVIOUS WORK IN THE STUDY AREA ...................................................... 16 2.1. Talara Basin ..................................................................................................... 16 2.2. Tumbes Basin .................................................................................................. 16

3.0. DATA GATHERING .......................................................................................... 18 3.1. Database .......................................................................................................... 18

4.0. SCOPE OF PROJECT ......................................................................................... 19 5.0. GEOLOGY OF THE TALARA AND TUMBES BASINS .................................. 21

5.1. Regional Geology ............................................................................................ 21 5.1.1. Pre-Andean System ................................................................................... 21 5.1.2. Andean System ......................................................................................... 24

5.2. Geology of the Talara and Tumbes Basins Project Area ................................... 24 5.2.1. Basement .................................................................................................. 26 5.2.2. Paleozoic................................................................................................... 26 5.2.3. Cretaceous................................................................................................. 26 5.2.4. Cenozoic ................................................................................................... 34

5.2.4.1. Tertiary............................................................................................... 34 5.2.4.2. TALARA BASIN............................................................................... 34 5.2.4.3. TUMBES BASIN............................................................................... 38

5.3. Regional Tectonics Settings ........................................................................ 39 5.3.1. Geometric and structural analyses of the Talara and Tumbes forearc basins40

5.3.1.1. Tumbes Basin ..................................................................................... 41 5.3.1.2. Talara Basin ....................................................................................... 44 5.3.1.3. Posters................................................................................................ 46

6.0. GEOPHYSICS .................................................................................................... 47 6.1. Seismic Data .................................................................................................... 47 6.2. Airmagnetometry and Air gravity..................................................................... 48

7.0. PETROLEUM GEOLOGY.................................................................................. 50 7.1.Geochemistry.................................................................................................... 50

7.1.1. General Discussion.................................................................................... 50 7.1.2. Source Rocks and Maturity ....................................................................... 51

7.1.2.1. Tertiary............................................................................................... 52 7.1.2.2. Cretaceous.......................................................................................... 53 7.1.2.3. Paleozoic ............................................................................................ 54

7.1.3. Talara Basin .............................................................................................. 54 7.1.3.1. Sample Analyses ................................................................................ 54 7.1.3.2. Hydrocarbon Analyses........................................................................ 57 7.1.3.3. Oil Families........................................................................................ 58 7.1.3.4. Oil-Oil and Oil-Source Rock Correlations .......................................... 59 7.1.3.5. Migration and Remigration of Hydrocarbons ...................................... 60

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7.1.3.6. Hydrocarbon Kitchens ........................................................................ 60 7.1.3.7. Hydrocarbon Occurrences and Petroleum Systems ............................. 61 7.1.3.8. Reservoirs, Seals and Traps ................................................................ 62

7.1.4. Tumbes Basin............................................................................................ 62 7.1.4.1. Sample Analyses ................................................................................ 62 7.1.4.2. Hydrocarbon Analyses........................................................................ 64 7.1.4.3. Oil Families........................................................................................ 65 7.1.4.4. Migration and Remigration of Hydrocarbons ..................................... 65 7.1.4.5. Hydrocarbon Kitchens ........................................................................ 65 7.1.4.6. Hydrocarbon Occurrences and Petroleum Systems ............................. 66 7.1.4.7. Reservoirs, Seals and Traps ................................................................ 66

7.1.5. Temperature Gradient................................................................................ 67 7.2. Thermal Maturity And HC Generation Modeling. ............................................ 70

7.2.1. Introduction............................................................................................... 70 7.2.2. Data Input and Modeling........................................................................... 70 7.2.3. Talara Basin .............................................................................................. 72

7.2.3.1. Well Lomitos 3585, Negritos Talara High .......................................... 73 7.2.3.2. Well Lomitos 3835, Negritos Talara High .......................................... 76 7.2.3.3. Well La Casita 55X, Bayovar Bay ...................................................... 78 7.2.3.4. Well SBXA, Bayovar Bay .................................................................. 82

7.2.4. Tumbes Basin............................................................................................ 84 7.2.4.1. Barracuda 15-4X Well ........................................................................ 84 7.2.4.2. Corvina 40X Well............................................................................... 86 7.2.4.3. Pseudowell 1 ...................................................................................... 88

8.0. PROSPECTS AND LEADS IN THE TALARA AND TUMBES FOREARC BASINS ..................................................................................................................... 91

8.1. New Prospects and Leads................................................................................. 92 8.1.1. Tumbes Basin............................................................................................ 94

8.1.1.1. Atun Prospect ..................................................................................... 94 8.1.1.2. Banco Peru Prospective Area.............................................................. 96 8.1.1.3. Chita Prospect .................................................................................... 99 8.1.1.4. Corvina type lead associated to Chita Prospect ..................................101 8.1.1.5. Deeper Delfin Lead ...........................................................................103 8.1.1.6. Espada Lead ......................................................................................104 8.1.1.7. Jurel Lead..........................................................................................106 8.1.1.8. Lenguado Lead..................................................................................107 8.1.1.9. Merluza Lead ....................................................................................108 8.1.1.10. Paiche Prospect................................................................................109 8.1.1.11. Perico Lead .....................................................................................110 8.1.1.12. Raya Prospect..................................................................................111 8.1.1.13. Toyo Prospect..................................................................................113 8.1.1.14. Zorritos-Piedra Redonda Lead .........................................................116

8.1.2. Talara Basin .............................................................................................116 8.1.2.1. Calamar Lead ....................................................................................117 8.1.2.2. Caballa Prospect................................................................................118 8.1.2.3. Tortuga Prospect................................................................................118 8.1.2.4. Deeper Lobitos Paleozoic Lead..........................................................120 8.1.2.5. Mero Lead.........................................................................................120 8.1.2.6. Tiburon lead ......................................................................................121 8.1.2.7. Other prospects..................................................................................122

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8.2. Previously Defined Prospects and Leads .........................................................123 9.0. CONCLUSIONS ...........................................................................................124

9.1. General ...........................................................................................................124 9.2. Stratigraphy ....................................................................................................124 9.3. Tectonics ........................................................................................................124 9.4. Petroleum Systems and Basin Modeling..........................................................125 9.5. Prospects and Leads ........................................................................................126

10.0. SELECTED REFERENCES.............................................................................128

FIGURES Figure 1. Location Map. NW Coastal Basins with location of the Talara and Tumbes

Basins................................................................................................................. 13 Figure 2. Stratigraphic Column of the Talara Basin. Figure modified from old IPC

files..................................................................................................................... 22 Figure 3. Stratigraphic Column of the Tumbes Basin. Figure modified from OXY

(2000). ................................................................................................................ 23 Figure 4: Location Map of Cross Sections in The Talara and Tumbes Basins.

Enclosures 2....................................................................................................... 25 Figure 5. Paleozoic and Cretaceous in well EA 1875 in the Laguna Oil Field.......... 27 Figure 6. Paleozoic and Cretaceous in well EA 2114-P in the Laguna Oil Field...... 28 Figure 7. Paleozoic and Cretaceous in well EA 1885 in the Laguna Oil Field.......... 29 Figure 8. Paleozoic and Cretaceous in well EA 2294 in the Laguna Oil Field.......... 30 Figure 9. Paleozoic and Cretaceous in well EA 2323-E in the Laguna Oil Field...... 31 Figure 10. Stratigraphic relationship in formations of early Tertiary age in the Talara

Basin. ................................................................................................................. 37 Figure 11: Morphological and structural configuration in the Andean Cordillera,

showing the Talara and Tumbes forearc basins. ............................................... 40 Figure 12. Geological and structural map of the onshore portions of the Tumbes and

Talara basins and adjacent areas, showing the location of interpreted seismic lines in red and regional cross sections, referred to in this chapter. .................. 41

Figure 13. Structural map of the Tumbes basin and northern part of the Talara basin. For more details see Appendix 3 and Enclosure 3m................................ 42

Figure 14. Seismic interpretation of the line PC 99-01, showing the gravitational structures associated with the Corvina and Barracuda structures. In the Corvina structure note, the importance of the rock units subcropping the base of the Cardalitos unconformity with respect to hydrocarbon exploration. More details can be found in Appendix 3 and Enclosure 3a. ................................................. 42

Figure 15. Seismic interpretation of the line AIP 92-49, showing the Delfin structure with its deeper Lead and the Lenguado lead. More details can be found in Appendix 3 and Enclosure 3c. ........................................................................... 43

Figure 16. Seismic interpretation of the regional seismic line RIB 93-01, showing the main tectonic elements of the Tumbes Basin. The Banco Peru is on the left and the Tumbes Basin on the right. This seismic interpretation shows two potential prospective structures, the Chita and Paleozoic Banco Peru leads. More details can be found in Appendix 3 and Enclosure 3c................................................... 43

Figure 17. Seismic interpretation of the line AIP 92-30, showing the Zorritos Piedra Redonda High to the right, the Deep Piedra Redonda Lead associated with the Eocene series and the Perico and Raya leads to the left. According to the structural and seismic interpretation, the Zorritos Piedra Redonda High is part

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of a present-day SW- NE horst structure. The western flank (offshore) of this feature is defined by the SW-NE trending Tumbes and Piedra Redonda normal listric faults. The eastern flank (onshore) of this structure is defined by the SW- NE trending Tronco Mocho, Cardalitos and Carpitas normal fault system, which dips to the SE. This fault system is related to the ancient structural configuration of the Paleogene Talara basin that was reactivated during the Neogene........... 43

Figure 18. Seismic interpretation of the line AIP 92-12, shows the western boundary of the Zorritos Piedra Redonda High and the Jurel and Perico leads. These structures appear to have considerable potential as exploration targets. More information can be found in Appendix 3 and Enclosure 3e............................... 44

Figure 19. Seismic interpretation of the line RIB 93-01. This section shows the shallow and deep platforms, where the Merluza and Mero rollover structures developed with high potential for exploration. More details can be found in Appendix 3 and Enclosure 3g. ........................................................................... 45

Figure 20. Seismic interpretation of the line RIB 93-08, showing the potential of the offshore tectonic structures in the shallow and deep marine platforms. The Deeper Lobitos lead is defined to target the Paleozoic series in direct contact with potential Cretaceous and Lower Tertiary source rocks. The Tiburon lead corresponds to new structural leads in ultra deep waters. More details can be found in Appendix 3 and Enclosure 3h.............................................................. 45

Figure 21. Seismic interpretation of the regional line RIB 93-16, showing the tectonic elements of the Talara basin. On the left, the subduction trench is seen where the oceanic crust pass under the continental crust. On the right, the shallow platform shows the Calamar rollover structure and the Paleozoic lead. Potential exploration targets in interpreted kitchen areas. More details can be found in Appendix 3 and Enclosure 3i. ............................................................................ 45

Figure 22. Seismic interpretation of the line RIB 93-21, showing the Bayovar Bay bounded by the Illescas and Paita Highs. The Bayovar Bay illustrates the many structures associated to rollover anticline structures. According to seismic and structural interpretations, these structures show high potential for exploration. More details can be found in Appendix 3 and Enclosure 3j............................... 46

Figure 23. Seismic interpretation of the line PTP 99-23, located in an area where the Talara to Sechura Basin merge. It shows the San Pedro and East San Pedro structures. More details can be found in Appendix 3 and Enclosure 3k. ........... 46

Figure 24. Seismic interpretation of the line PTP 99-24, this section is located in an area where the Talara merges with the Sechura Basin. It also shows the San Pedro and East San Pedro structures. More details can be found in Appendix 3 and Enclosure 3l. ............................................................................................... 46

Figure 25. Seismic reference map. ............................................................................ 47 Figure 26. High Density Basement Map in NW Peru (Petrotech, 2001). .................. 49 Figure 27. Correlation between GCMS of a representative oil sample from the Talara

Basin and from an extract of a cutting sample of the Heath Formation in the Piedra Redonda Field (Fildani, 2005)................................................................ 51

Figure 28. Gray shales of the Talara Shale offer good visual source rock character in the Mancora area in two sites distanced some 20 Km. away. ............................. 53

Figure 29. Total Organic Carbon in the Talara Basin, DGSI Data. ......................... 55 Figure 30. Total Organic Carbon in the Talara Basin, Previous Reports. ................ 55 Figure 31. Oil composition in the Talara and Tumbes Basins based on LC.............. 57 Figure 32. Total Organic Carbon in the Tumbes Basin, data from DGSI................. 63 Figure 33. Total Organic Carbon in the Tumbes Basin, data Perupetro Files. ......... 64

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Figure 34. Hydrocarbon occurrences in wells in the offshore Tumbes Basin. .......... 66 Figure 35. Temperature Gradient.............................................................................. 68 Figure 36. Basin Modeling in the Talara (La Casita 55X. Lomitos 3585 & 3835 wells)

and Tumbes Basins (Barracuda 154X, Corvina 40X & Pseudowell 1). ............. 70 Figure 37. Pre- Cretaceous and post-Cretaceous Maturity burials in the Lomitos

3585 Well. .......................................................................................................... 74 Figure 38. Post-Cretaceous Maturity burial in the Lomitos 3585 Well. .................... 74 Figure 39. Maturity Vs. Depth. 1D Modeling in the Negritos High in the Talara

Basin. ................................................................................................................. 75 Figure 40. Post-Cretaceous Maturity burial in the Lomitos 3835 Well. The Upper

Cretaceous in the Late Mature Window, the early Eocene interval in the mid-mature oil window and younger Formations in the early-mature oil window.... 77

Figure 41. Maturity versus Time plot in the Barracuda Lomitos 3835 Well.............. 77 Figure 42. Maturity versus Depth plot in the Lomitos 3835 Well. ............................ 78 Figure 43 and Figure 44. Burial history in Well SBX-A shows the base of the

Cretaceous Formation in the Mid Mature Window stage of the oil window and the overlying section in the early mature window. ............................................. 80

Figure 45. Maturity Vs. Depth in Well La Casita 55X............................................... 81 Figure 46. Maturity Vs. Time in Well La Casita 55X. ............................................... 81 Figure 47. Burial history in Well SBX-A shows the base of the Muerto/Pananga

formations in the early stages of the oil window and the immature overlying section. ............................................................................................................... 83

Figure 48. Maturity Vs Depth diagram in well SBX-A shows two major burial histories.............................................................................................................. 83

Figure 49. Maturity burial in the Barracuda 15-4X Well shows the possible early Eocene interval in the mid-mature oil window and the late Eocene and the Mancora and Heath Formations in the early-mature oil window...................... 85

Figure 50. Maturity versus Time plot in the Barracuda 15-4X Well.......................... 85 Figure 51. Maturity burial in the Corvina 40X Well shows the bottom possible early

Eocene interval in the mid-mature oil window and the late Eocene and the Mancora and Lower Heath Formations in the early-mature oil window........... 87

Figure 52. Maturity versus Time plot in the Corvina 40X Well. ................................ 87 Figure 53. Maturity burial in the Pseudowell 1 shows modeled stratigraphic units

from possible Eocene interval in the Main Gas Generation Window to immature units from the upper Tumbes Formation to younger units. ............................... 89

Figure 54. Maturity versus Time plot in the Corvina 40X Well. ................................ 89 Figure 55: Prospects and Leads in Tumbes and North Talara Basin........................ 93 Figure 56: Two-way time structural map on the top Cardalitos Formation, showing

the Atun Prospect............................................................................................... 94 Figure 57: Seismic line OXY98-114 showing the east culmination of the Atun

structure. ............................................................................................................ 95 Figure 58: Seismic line OXY98-115a showing the west culmination of the Atun

structure. ............................................................................................................ 95 Figure 59: Two-way time structural map on the top Zorritos Formation, showing the

Banco Peru Prospective area. ............................................................................ 96 Figure 60: West to East seismic line Rib 93-01 across the Banco Peru Prospective

area .................................................................................................................... 97 Figure 61: Seismic line RIB 93-01 flattened on Zorritos Formation, showing the

Banco Peru structure and Tumbes basin ........................................................... 97 Figure 62: Seismic line RIB 93-02 across the Banco Peru structure ........................ 98

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Figure 63: NW to SE seismic lines OXY 98-221 across the Banco Peru Structure. .. 98 Figure 64. Chita prospect defined by seismic line RIB 93-01, showing the principal

exploration targets. More details can be found in Appendix 3 and Enclosure 3p............................................................................................................................ 99

Figure 65: Two-way time structural map on the top Zorritos Formation, showing the Chita Prospect...................................................................................................100

Figure 66: NW to SE seismic line PC 99-09 across the Chita Prospect....................100 Figure 67: Seismic line AIP 92-29 showing the Chita Prospect and the Barracuda

structure. ...........................................................................................................101 Figure 68: Structural 2WT on the top Zorritos Formation map, showing the Chita

stratigraphic prospect........................................................................................102 Figure 69: Composite seismic profile A-A1, showing the Chita stratigraphic lead...102 Figure 70: Isopach map of the Corvine Type lead on Zorritos Formation associated to

Chita Prospect...................................................................................................103 Figure 71: Deeper Delfn Lead defined by seismic line AIP 92-49, showing the

potential structural configuration and explorations targets. More detail can be found in Appendix 3 and Enclosure 3p.............................................................104

Figure 72: Two-way time structural map on top Zorritos Formation showing the Espada Lead......................................................................................................105

Figure 73: NW to SE seismic lines AIP92-66 showing the Espada Lead. ................105 Figure 74: Jurel Lead defined by seismic line AIP 92-12, showing the potential

structural configuration and explorations targets.............................................106 Figure 75 Lenguado Lead defined by seismic line AIP 92-49, showing the potential

structural configuration and explorations targets.............................................107 Figure 76. Merluza Lead defined by seismic line RIB 93-05, showing the potential

structural configuration and explorations targets. More detail can be found in Appendix 3 and Enclosure 3p. ..........................................................................108

Figure 77: Two-way time structural map on the top Zorritos Formation, showing the Paiche Prospect.................................................................................................109

Figure 78: NW to SE seismic lines OXY 98-210 showing the Paiche Structure.......110 Figure 79. Perico Lead defined by seismic line AIP 92-12, showing the potential

structural configuration and explorations targets. More detail can be found in Appendix 3 and Enclosure 3p. ..........................................................................111

Figure 80: Two-way time structural map on the top Cardalitos Formation, showing the Raya Prospect..............................................................................................112

Figure 81: Seismic line AIP 92-32 across the Raya Structure..................................113 Figure 82: North to South seismic line AIP 92-10 showing the Raya Structure ......113 Figure 83: Two-way time structural map on the top Cardalitos Formation, showing

the Toyo Prospect..............................................................................................114 Figure 84: SW to NE seismic line PC 99-16 across the Toyo Structure. ..................115 Figure 85: Seismic line AIP 92-41 showing the Toyo Prospect. ...............................115 Figure 86. Zorritos-Piedra Redonda Lead................................................................116 Figure 87. Calamar Lead defined by seismic line RIB 93-16, showing the potential

structural configuration and explorations targets. More detail can be found in Appendix 3. .......................................................................................................118

Figure 88: Two-way time structural map on top of Paleozoic Basement, showing the in the east the Tortuga prospect and in the west part, the Caballa structure.....119

Figure 89: West to East seismic line PTP 98-17, showing the Tortuga and Caballa structure. See location on Figure 34. ................................................................119

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Figure 90. Deeper Lobitos Paleozoic Lead defined by seismic line RIB 93-08, showing the potential structural configuration and explorations targets. More detail can be found in Appendix 3 and Enclosure 3p. .......................................................120

Figure 91. Mero Lead defined by seismic line RIB 93-05, showing the potential structural configuration and explorations targets. More detail can be found in Appendix 3 and Enclosure 3p. ..........................................................................121

Figure 92: Tiburon Lead defined by seismic line RIB 93-08, showing the potential structural configuration and explorations targets. More detail can be found in Appendix 3 and Enclosure 3p. ..........................................................................122

TABLES

Table 1. Geochemical analyses in the Tumbes Basin. .............................................. 63 Table 2. Porosity and Permeability of Zorritos Formation in the Tumbes Basin. ..... 67 Table 3. Production tests in offshore wells in the Tumbes Basin............................... 67 Table 4. Heat Flow in the Talara.............................................................................. 71 Table 5. Well Sandino 6020 in the Talara Basin. ...................................................... 72 Table 6. Well Lomitos 3585 in the Talara Basin........................................................ 73 Table 7. Well Lomitos 3835 in the Talara Basin........................................................ 76 Table 8. Well La Casita 55X, Bayovar Bay. ............................................................... 79 Table 9. Well SBX-A Formations and Events............................................................ 82 Table 10. Well Barracuda 15-4X in the Tumbes Basin.............................................. 84 Table 11. Well Corvina 40X in the Tumbes Basin. .................................................... 86 Table 12. Pseudowell 1 in the Tumbes Basin............................................................. 88 Table 13: List of Prospect and Leads in Tumbes Basin and South Talara Basins .... 92

ENCLOSURES Enclosure 1a. Tumbes Talara Basins Base Map, North. Enclosure 1b. Tumbes Talara Basins Base Map, South Enclosure 1c. Talara Basin Base Map, South Enclosure 1d. Tumbes Talara Basins Geological Map Enclosure 2a. N-S Structural-Stratigraphic Cross Section Enclosure 2a-1 and 2. N-S Flattened Stratigraphic Cross Sections Enclosure 2b. E-W Structural-Stratigraphic Cross Section Enclosure 2b-1, 2, 3 and 4. E-W Flattened Stratigraphic Cross Sections Enclosure 2c. NW-SE Structural-Stratigraphic Cross Section Enclosure 2c-1. Flattened NW-SE Stratigraphic Cross Section Enclosure 2d. NW-SE Structural-Stratigraphic Cross Section Enclosure 2d-1 and 2. NW-SE Flattened Stratigraphic Cross Sections Enclosure 2e. NE-SW Structural-Stratigraphic Cross Section and Enclosure 2e-1 Flattened NE-SW Stratigraphic Cross Section Enclosure 2f. NE-SW Structural-Stratigraphic Cross Section Enclosure 2f-1 and 2. NE-SW Cross Sections Enclosure 2g. NE-SW Structural-Stratigraphic Cross Section Enclosure 2g-1, 2 and 3. NE-SW Flattened Stratigraphic Cross Sections Enclosure 2h. NW-SE Structural-Stratigraphic Cross Section Enclosure 2i. WSW-ESE Structural-Stratigraphic Cross Section Enclosure 2i-1, 2 and 3. WSW-ESE Flattened Stratigraphic Cross Sections

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Enclosure 2j. NW-SE Structural Cross Section S1-S1 Enclosure 2k. NW-SE Structural Cross Section S2-S2 Enclosure 2l. NW-SE Structural Cross Section S3-S3 Enclosure 2m. NW-SE Structural Cross Section S4-S4 Enclosure 2n. N-S Structural Cross Section S5-S5 Enclosure 2o. W-E Stratigraphic Cross Section S6-S6 Enclosure 2p. W-E Structural Cross Section S7-S7 Enclosure 2q. W-E Structural Cross Section S8-S8 Enclosure 2r. SW-NE Structural Cross Section S9-S9 Enclosure 2s. W-E Structural Cross Section S10-S10 Enclosure 2t. SW-NE Regional Cross Section R1-R1 Enclosure 3a. Seismic interpretation line PC 99-01 Enclosure 3b. Seismic interpretation line AIP 92-49 Enclosure 3c. Seismic interpretation line RIB 93-01 Enclosure 3d. Seismic interpretation line RIB 93-30 Enclosure 3e. Seismic interpretation line AIP 92-12 Enclosure 3f. Seismic interpretation line AIP 92-60 Enclosure 3g. Seismic interpretation line RIB 93-05 Enclosure 3h. Seismic interpretation line RIB 93-08 Enclosure 3i. Seismic interpretation line RIB 93-16 Enclosure 3j. Seismic interpretation line RIB 93-21 Enclosure 3k. Seismic interpretation line PTP 99-23 Enclosure 3l. Seismic interpretation line PTP 99-24 Enclosure 3m. Regional cross section A-A Enclosure 3o. Regional cross section B-B Enclosure 3p. Regional cross section C-C Enclosure 3q. Leads and Structures Map of The Tumbes and North of Talara Basins Enclosure 4a. Top Middle Eocene (North) Tumbes Basin, TWT Structure Map Enclosure 4b. Top Middle Eocene (South) Tumbes Basin, TWT Structure Map Enclosure 4c. Top Middle Eocene (North - South) Tumbes Basin, TWT Structure Map Enclosure 4d. Top Muerto Fm.(Talara Basin), TWT Structure Map Enclosure 4e. Top Zorritos Fm., TWT Structure Map Tumbes Basin Enclosure 4f. Top Cardalitos Fm., TWT Structure Map Tumbes Basin Enclosure 4g. Cardalitos Fm., TWT Isochrone Map. Enclosure 4h. Top Middle Eocene (North), Prospects and Leads TWT Map Enclosure 4i. Top Middle Eocene (South), Prospects and Leads TWT Map. Enclosure 5a. Digital Elevation Model (DEM to 90m) Peruvian Basins. Enclosure 5b. Morphological/Structural Configuration in the Andean Cordillera. Enclosure 5c. Tumbes and Talara Forearc Basin Geometry and Structural Style, I Enclosure 5d. Tumbes and Talara Forearc Basin Geometry and Structural Style, II Enclosure 5e. Tumbes and Talara Forearc Basin Geometry and Structural Style, III Enclosure 6. 1 CD containing Digital Data:

a. Report: Text and figures in A4 & A3 format b. Enclosures 1 through 6 in various formats c. Appendices 1 through 5

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APPENDICES

1. Compilation: Geochemical Database for the Talara and Tumbes Basins and adjacent Lancones and Sechura Basins.

2. Report: Reconocimiento Geolgico. rea Mncora: Quebrada Seca, Fernndez-Mncora, Cabo Blanco, Ysabel caldern, May 2005.

3. Report: Anlisis de la Geometra y Estilo de Deformacin de las Cuencas Talara y Tumbes: Nuevos Leads de Exploracin, Wilber Hermoza, December 2005.

4. Summary of Previously Defined Prospects and Leads in the Tumbes Basin, after Occidental Petrolera del Per, Inc., Sucursal del Per, Departamento de Exploracin, Cuenca Progreso Tumbes, Per, Block Z-3, Reporte Final, Diciembre 2001.

5. Spread sheet of Wells Logs with LAS format in the Talara and Tumbes Basins.

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EXECUTIVE SUMMARY The Talara and Tumbes Basins has been the site of extensive hydrocarbon exploration and exploitation since the XIX century. The first well in Peru was spudded in Zorritos in 1863 and by year 1920 nearly 1000 wells had been drilled in the basins. To date, eighteen wells have been drilled in the offshore Tumbes Basin and some 13,200 wells in the Talara Basin, including near 1,300 offshore wells. Cumulative production is about 1.4 BBO and 1.7 TCF, mainly from the Talara Basin. Published literature establishes a mean estimated recoverable undiscovered hydrocarbons in the Talara Basin in the range between 2.2 to 1.71 BBO, 5.84 to 4.79 TCFG, and 255 MMB of NGL, of which between 85% to 70% are offshore and between 15% to 30% onshore. Mean estimated recoverable undiscovered oil, gas and natural gas liquids in the Tumbes (Peru) and bordering Progreso Basin (Ecuador) is to 237 MMBO, 255 BCFG, and 32 MMB of NGL. Over 90% of the oil produced come from areas did not count with seismic data. There is a high hydrocarbon potential in the unexplored shallow and deep water for Eocene as well as for the pre-Eocene objectives in the Talara Basin and in the numerous undrilled prospects and leads to target the Oligocene and Miocene objectives in the largely unexplored Tumbes Basin. All hydrocarbon exploration and development in both basins have been performed on the onshore and in the offshore portions of the basins in water depths of less than 120m. The 2005 year San Pedro oil discovery in Paleozoic metamorphic rocks in the Bayovar Bay testifies the exploration potential for the undiscovered reserves. The Tumbes and Talara Basins have excellent potential with a variety of opportunities that remain as untested prospects and leads to target extensive stratigraphic columns. In the course of this geophysical and geological evaluation six of them in the Talara Basin and thirteen in the Tumbes Basin have been documented in Chapter 8, in the Regional Tectonic Settings in Chapter 5.3 and in Appendix 3. The areas adjacent to some of them also offer additional exploration opportunities of the pre-Eocene section as the border of the shallow and deep platforms in the Talara Basin. The attractiveness for hydrocarbon exploration of potential Cenozoic and Paleozoic sections in the Banco Peru had never been recognized. This feature has poor seismic definition and it is larger than the Talara Negritos High, which has a cumulative production of over 600 MMBO, most of which was produced in areas with no seismic data. Additionally, oil discovery in the San Pedro 1X well renewed hydrocarbon exploration of the Paleozoic rocks in the whole NW Peruvian basins. Although most areas in these basins are under different exploration stages, there exist prospects and leads of especial interest for future promotion as those defined in open areas or in areas under PEAs (Block Z-34) or under negotiations (Blocks Z-37 and Z-38) where license contracts will be signed. Previous studies defined other potential prospects and leads, but with a different untested petroleum system as defined in the present study (Appendix 4). The Talara and Tumbes Basins are two fore-arc basins genetically related to plate tectonics, the action of the South American and the Nazca plates overriding the

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subduction oceanic crust. Presence of good siliciclastic reservoirs, excellent quality source rocks, trapping mechanism and abnormal high temperature gradient created particular conditions to form a unique giant oil basin. The Talara and Tumbes Basins include thick sedimentary stratigraphic sequences of sediments of Paleozoic to Tertiary age that extend offshore and onshore along the Coastal region. Both basins constitute two fore-arc basins each with very thick sedimentary sections of Paleogene and Neogene ages. Sediment source to the east deposited up to 9,700 m. of sediments of Paleocene, Eocene and early Oligocene ages overlying the Cretaceous in 35 my in the Talara Basin. Thickness of the late Oligocene to Pliocene age in the Tumbes Basin reaches 7100 m., all the sections deposited in approximately 30 my. A major petroleum system accounts for most hydrocarbons in the Talara Basin. Oleanane biomarkers in oils and extracts define source rocks of late Cretaceous to Tertiary age. Formations of Eocene age constitute the main siliciclastic reservoirs with shale seals. Basin modeling interprets the presence of hydrocarbon kitchens originally connected to the area now occupied by the Negritos - Talara High and supposedly similar kitchens must have been connected to the Lobitos and El Alto - Pea Negra Structural Highs. Hydrocarbon generation and migration occurred from possibly offshore kitchens to the west, where source rocks should have better organic contents, since late Eocene to Oligocene time prior to the major complex block faulting with sealing faults characterizing these highs. The extension of the petroleum system to the deep offshore portion of the basins is unknown. Other potential kitchens have been previously defined in the oil and gas windows in the adjacent deep Lagunitos, Malacas and Siches grabens bordering the three major structural highs. A more complex petroleum system, or more than one, is interpreted to be present in the Tumbes Basin to account for the oil produced, the various oil and gas tests and the numerous hydrocarbon shows detected in the Oligocene and Miocene stratigraphic sequences. Source rocks and siliciclastic reservoirs of these ages are documented in the whole section possible superimposed on older petroleum systems. The geochemical analyses, hydrocarbon occurrences and basin modeling indicates the presence of active kitchens in deeper portions of the basin where the various source rocks acquired maturity enough to generate and expulse hydrocarbons. The assemblage of 9,814.55 km. of offshore 2D seismic lines in SEG-Y format and a well database in LAS format of 785 onshore and offshore wildcat and development wells constitute notable accomplishment of this study. 37 synthetic seismograms were created for wells in the Talara and Tumbes Basins. An Excel geochemical database compiled with newly acquired data and all available data of the coastal basins in the Perupetro files is also included in the report as Appendix 1.

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1.0. INTRODUCTION The Talara and Tumbes Basins are located on the NW coast of Peru (Figure 1). Drilling in these basins started a few years after Colonel Drake drilled its first well in Titusville, USA in the XIX century. Before oil production from the Maraon Basin reached the coast in the mid 70s, all hydrocarbon production was from the Talara Basin. Primary interest to initiate this study is the acknowledgment of the potentiality of the undiscovered hydrocarbons reserves in Talara and Tumbes Basins. As an example of what can be accomplished with very active shallow drilling was provided by the primary production obtained by the intense infill drilling between 1978 and 1982 with Helico and Echino Formations as objectives and secondary recovery afterwards in what is basically the present Block X in the Talara Basin (Organos, Patria, Somatito, Central, Carrizo, Cruz and Folche fields). Under a contract with Petroperu S.A., OXY drilled almost 1,000 wells, which represented completion of one well per day. The oil production for the block increased from 6,500 to 21,000 BOPD. Additionally, both the Talara and Tumbes Basins offshore have not been drilled in water depths deeper than 120 m. There is a high potential in the unexplored deep water in the Talara Basin for Eocene as well as for the pre-Eocene objectives and in the numerous undrilled prospects and leads in the largely unexplored Tumbes Basin.. According to the USGS (Higley, 2001), Mean estimated recoverable undiscovered oil, gas and natural gas liquids in the Talara Basin amounts to 1.71 BBO, 4.79 TCFG, and 255 MMB of NGL. These values represent the mean confidence level, mainly from Eocene-age sandstones and turbidites. Eighty-five percent of the undiscovered resources are in the offshore portion of the basin. Oil production is dominant, but excellent potential is indicated for offshore gas discoveries. Gas resources are mostly untapped because of the limited markets and gas infrastructure. Cumulative Production in the basin to 2003 is 1.416 BBO and 1.7 TCFG. Offshore operator Petrotech numbers are even higher placing the proven undeveloped and undiscoverable recoverable reserves in 2.2 BBO and 5.84 TCFG, of which 70% is offshore and 30% onshore (Gonzales and Alarcon, 2002). Mean estimated recoverable undiscovered oil, gas and natural gas liquids in the Tumbes (Peru) and Progreso (Ecuador) basins amounts to 237 MMBO, 255 BCFG, and 32 MMB of NGL. These are also figures from the USGS (Higley, 2001). The Peruvian Ministry of Energy and Mines groups hydrocarbon statistics for the coastal onshore and offshore producing basins, basically the Talara and Tumbes Basins. MEM total undeveloped, probable and possible reserves amount to 1.35 BBO and 5.3 TCF. Cumulative production for year 2003 in Perupetro S.A. files is set to 1.4 BBO and 1.7 TCF, mainly from the Talara Basin. The emphasis on the current work has been on well and seismic data gathering, quality controlling and correcting the data and in presenting the stratigraphic and structural framework of the basin. The present report is as complete an evaluation of the Talara and Tumbes Basins as the data permitted to accomplish. This study represents an excellent starting point to be continued with a more detailed examination of the basin. Despite receiving additional data sets needed for the interpretation within the last two

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months of the study to complete the analysis, most of the objectives have been met. The new data was loaded into the database and quality control of it will be needed in the

future.

Figure 1. Location Map. NW Coastal Basins with location of the Talara and Tumbes Basins.

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The SEGY seismic and LAS well data utilized in this project was supplied originally by Perupetro and by the operators of the various licenced blocks involved. The Basin Evaluations Funtional Group of Perupetro S.A. performed the current report.. The 2D seismic was interpreted primarily utilizing Schlumberger Geoframe UNIX based seismic interpretation software. On the geological side, Geographix and DigiRule software were used extensively for mapping, well log editing and cross-section construction.

1.1. Regional Basin Description Peru is divided into four main morphological regions, three onshore and one offshore. The three onshore regions include the Andes Cordillera Region in the center, the Sub-Andean Region to the east of the Andean Cordillera and the Coastal Region to the west bordering the Pacific Ocean. The Offshore Region encompasses the Pacific Ocean. Nineteen sedimentary basins extend in all these regions with current hydrocarbon production in all including the Andes Region. The Coastal Region is a narrow land strip separating the Andes from the Pacific Ocean. This region incorporates 11 sedimentary basins some of which extend to the Offshore Region as one single basin and others are separated by inferred regional faults parallel to the shoreline. This report will concentrate on the northwestern Coastal Region and NW Offshore Region, which has been the site of extensive hydrocarbon activities for over 130 years in the known Talara and Tumbes Basins. The Talara Basin trends NE-SW parallel and to the W and NW of the Amotape Mountains (Figure 1). The basin is limited to the south at the Paita High by the western extension of the continental E-W trending Huancabamba deflection fault system at its Pacific Ocean termination. The Huancabamba Deflection is a mega-shear running approximately all its way to the east along the Amazon River to the Atlantic Ocean. At its southern border and to the southeast in the Bayovar Bay, the site of the 2005 San Pedro oil discovery, the Talara Basin is partially connected with the Sechura Basin. Further to the north, the basin is bordered by the Amotape Mountains to the east and northeast; these mountains separate the Talara Basin from the Lancones Basin. The Talara Basin merges north into the Tumbes Basin in the Punta Sal Beach area, located some 15 Km. north of the Mancora City. The onshore Talara Basin extends offshore with a topographic character defined below in the Bathymetry section of this report. The bathymetry defines a shallow and a deep platform caused by the listric Talara Fault, a regional mostly NS fault that creates the major rollover anticlinal lead with Cenozoic, Mesozoic and possibly Paleozoic sediments (Enclosure 3p). The Talara Fault extends north to the south end of the Banco Peru Fault. The bulk of drilling and production is focused in the three major structural highs Pea Negra, Lobitos and Talara/Negritos in the Talara Basin. Some 14,000 wells established a cumulative production and the additional proved, probable and possible reserves mentioned above, mostly from Tertiary lower Eocene reservoirs.

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The Tumbes Basin is a tectonic depression with a similar NE-SW trend as the Talara Basin. The basin continues north into Ecuador as the Progreso Basin. The east and NE onshore border approximately coincides with the Zorritos-Piedra Redonda High (Enclosure 3p). This high is limited to the west by a fault system formed by the Piedra Redonda and Tumbes Faults and to the east by a listric fault system that includes the Carpitas and Tronco Mocho faults. The NW border of the Tumbes Basin includes the Banco Peru Structure. This feature is described as a sea mound or tectonic high with a remarkable topographic expression with shallowest expression of some 50 km2 in water depths less than 100 m. and whose composition and origin remains to be established. The Banco Peru Structure is larger than the Talara Negritos High, the largest tectonic high in the Talara Basin. A chaotic sedimentary section of possible Cenozoic and Paleozoic age is present in deep waters west of the Banco Peru Structure (Enclosure 3c).

1.2. Bathymetry The sea bottom was mapped from topographic data acquired from the seismic campaigns (Enclosures 1a, 1b, 1c and 1d). In the Tumbes Basin at the Peru/Ecuador border the 500 m. isobaths extends 100 km. from the coastline west past the western slope of the Banco Peru (Enclosure 1a). Some 50 km2 of the shallow Banco Peru lies above the 100 m. isobaths. The deepest portion of the Tumbes Basin is located to the SE and S of the Banco Peru in water depths that increase from 500 to over 1000m. West of Punta Sal at the southern border of the basin the 500, 1000 m. and 2000 m. isobaths extend 20, 30 and 50 km. from the coastline. All wells in the offshore Tumbes Basin were drilled in water depths shallower than 120 m. Most of the offshore Talara Basin shows two major platforms (Enclosures 1b and 1d). The first platform with water depths shallower than 200 m. extends 8 to 12 km. from the coastline in front of the three main structural highs El Alto/Pea Negra, Lobitos and Talara/Negritos. All wells drilled in the offshore Talara Basin are located on this platform. The second platform is 40 km long by 15 km. wide in water depths in the range between 2200 m. and 3000 m. The eastern border of this platform is located some 20 km. west of the El Alto/Lobitos/Talara coastline. An elongated N-S slope separates the two platforms where the sea bottom drops rapidly from 200 to 2200 m. In the southern Talara Basin, the sea bottom widens conspicuously in front of the Lagunitos, Paita High, Chira Bay and Bayovar Bay (Enclosure 1c). On these bays the 500 m. isobaths extends 20, 30 and 35 km offshore. from the coastline and drops more rapidly beyond this water depth. The same 500 m. isobaths is narrow in front of the offshore extension of the onshore Paita and Illescas Highs.

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2.0. PREVIOUS WORK IN THE STUDY AREA The onshore Talara and Tumbes Basins has been the site of extensive hydrocarbon exploration and exploitation since the XIX century by several companies. Fabrica de Gas de Lima spudded the first well in Peru in Zorritos in the Tumbes Basin on November 2, 1863. The first cable well was drilled in Negritos in the Talara Basin in 1874 and by year 1920 nearly 1000 wells had been drilled (Travis, 1953).

2.1. Talara Basin Drilling in the Talara Basin started in the late XIX century. In the late half of the XX century active oil companies were Compaia Petrolera Lobitos, the state oil company Empresa Petrolera Fiscal and Exxons International Petroleum Company until 1970. IPC acquired the Concesiones Lima from the Compaia Petrolera Lobitos in the 1950s. The state oil company Petroleos del Peru S.A., Petroperu S.A. took over all onshore upstream and downstream operations in NW Peru in the late 60s. Petroperu abandoned the upstream hydrocarbon business in the 90s. OXY also operated several onshore oil fields between 1978 and 1996 as a secondary recovery project. Production in NW Peru comes mainly from the offshore and onshore Talara basin fields and minor production from small onshore Tumbes Basin fields. Old onshore fields were compartmentalized as smaller production units from the 80s and are currently operated by several oil companies. These companies include the following (Enclosures 1a, 1b, 1c and 1d):

1. Petrobras Energia Peru S.A. in Block X, 2. Sapet Development Peru Inc., Sucursal Del Peru in Blocks VI and VII, 3. Graa y Montero Petrolera S.A. in Blocks I, and V, 4. Petrolera Monterrico S.A. in Blocks II, XV and XX, 5. Empresa Petrolera Unipetro ABC S.A.C. in Block IX, 6. Cia. Petrolera Rio Bravo S.A. in Block IV, 7. Mercantile Peru Oil & Gas in Block III, 8. Petrotech Peruana S.A. in offshore Block Z-2B 9. Graa y Montero Petrolera in Block XIV, onshore Tumbes Basin,

The offshore extension of the Talara Basin has been in exploration and production since the 1970s as the first offshore operation in South America. Belco Petroleum Corporation originally operated the Talara Basin offshore; Petromar S.A. followed it from the late 1980s and by Petrotech Peruana S.A from the mid 1990s. Total 2D seismic amounts to 12,004 Km. and 1584 Km. of 3D seismic. Petrotech currently has the only offshore hydrocarbon producing operation in Peru in Block Z-2B and holds an exploration license with no production in Block Z-6 in the south Talara Basin.

2.2. Tumbes Basin The state oil company Empresa Petrolera Fiscal (Empresa Petrolera Fiscal) carried out extensive field geology work and exploratory and development drilling in the border with the Talara Basin until the late 1960s. In the early 1960s there was gravity and aeromagnetic data acquisition by Empresa Petrolera Fiscal in the Los Organos area in the Talara and Tumbes Basins. Graa y Montero Petrolera S.A. also acquired 2D

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seismic and conducted wildcat and development drilling since the early 1990s in old Block V in this area. The offshore Tumbes Basin has been covered by several 2D seismic campaigns. In the early 1970s Petroper and the Joint Venture Petroper & Tenneco-Unin- Champlin acquired 2300 and 1612 Km of 2D seismic. The Joint Venture drilled 9 wells in 4 structures. Belco Petroleum Corporation joined the group, acquired 600 Km of 2D seismic in 1976 and drilled 10 wells (one was a deepening). Belco established oil production in the Albacora field in the early 1980s. Of the eighteen wells drilled in this period, gas was discovered in the Piedra Redonda and Corvina structures and oil in the Albacora field near the Ecuadorian border. A small oil production was established in the Albacora field and was later abandoned by Belco. All drilling was carried out in maximum water depths of 120m. Gas was also discovered north of Albacora in the Amistad field across the border in Ecuador. Interest in the offshore Tumbes Basin was resumed in the 1990s. American International Petroleum Company acquired 1850 Km of 2d seismic in 1991. Occidental Petrolera del Peru Inc., Sucursal Del Peru acquired 1759 km of 2D Seismic in 1998 in modern Block Z-3 . OXY made a Geological/Geophysical evaluation of the ex-Block Z-3 in 1998 based on new and reprocessed 2D seismic all tied to existing well data in Block Z-1. The 1759 Km. of new 2D seismic covers the westernmost extension of the Tumbes Basin including the Banco Peru; the seismic was spaced 2 Km apart for both the dip lines and the perpendicular tie lines. Additionally, OXY reprocessed 387.55 and 680.1 Km. of seismic acquired by Belco Petroleum Corp. in 1982 km and by AIP between 1992-93, respectively. Good correlation of seismic events tied to stratigraphic units was established in the most of the Z-3 block. Time to Depth conversion was not attempted and was recommended to perform with the future 3D seismic. OXYs evaluation defined a series of Prospects and Leads, which with additional data gathered in the present study are included in Appendix 4. Perez Companc S.A. acquired 1014 Km and reprocessed 1044 km of 2d seismic in modern Block Z-1 in 1999. BPZ holds current exploration licensees in onshore Block XIX and offshore Block Z-1. Most of the remaining areas in the Talara and Tumbes Basins are under either exploration licensees, negotiations for license contracts, TEAs or PEAs. BPZ Energy Inc., Sucursal Peru has currently Block Z-1 under an exploration license in the offshore Tumbes Basin. Present operations in Block Z-1 is to develop existing certified proven gas reserves in the old Corvina and Piedra Redonda gas discoveries to build an electrical plant to generate 160 MW and to export gas to Ecuador. BPZ also holds Area XIV in the Tumbes Basin under a TEA, Gold Oil PLC holds a PEA in Area Z-34 in the offshore Talara Basin. Blocks Z-38 in the main body of the Tumbes Basin and Block Z-37 in front of and to the south of the Bayovar Bay are under negotiations for exploration license contracts.

The Sechura and Lancones basins adjacent to the present study have been the subject of exploration and/or TEAs requests in the past 10 years. Most notably are the commercial operations developing dry gas by Olympic Peru Inc., Sucursal del Peru, in Block XIII in the Sechura Basin. Petrotechs oil discovery in the Bayovar bay has renewed interest to target the Paleozoic metamorphic rocks in the area and its landward continuation in the Sechura Basin.

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3.0. DATA GATHERING 3.1. Database

A digital database was prepared using available data from various seismic campaigns and wells. A wide range of appropriate seismic coverage of the Talara and Tumbes Basins was thus obtained with all these campaigns. Seismic used in this evaluation includes 9,814.550 Km of digital data in SEG-Y format from the following eight 2D seismic campaigns:

1. AIPGCP92LZ1 (American International Petroleum Corp.) 2. RIBDGC93LZ1 (Ribiana) 3. OXYWG98LZ3 (Occidental Sucursal del Per). 4. PETPMS98LZ2B (Petro-Tech Peruana) 5. PCOWG99LZI (Perez Companc) 6. PETPET99LZ2B (Petro-Tech Peruana) 7. PETPET00LZ2B (Petro-Tech Peruana) 8. PETPET01LZ2B (Petro-Tech Peruana)

Digital wire-line well logs in LAS format were very limited in the Perupetro files. Numerous wells were not available in digital format for the present evaluation. The Perupetro S.A. Geological and Geophysical Evaluation Group (GFEGG) obtained additional data throughout several requests to the local companies and loaded a total of 785 onshore and offshore wildcat and development wells in its database. In fact, some companies still lack digitized wire-line logs and work only with hard copies and others have 5-6 digitized logs in blocks with several hundred wells. Additionally, only some 50% of the obtained digitized wire-line logs were QCd in time to incorporate them to the project. Some wells lacked several curves completely and others were partially digitized, so that mainly the GFEC completed digitizing them with some Schlumberger support. Perupetro S.A. obtained very good support from the operating companies in both basins. The geological map presented in the northern base maps is a compilation of BPZ data, currently active in the NW Coastal Region (Enclosures 1a and 1b). Some discrepancies are present on the topographic compilations of the seismic and surface geology with mismatch of different sets of data increasing from north to south. We can attribute these discrepancies to the coordinate systems used and possibly to the scanning procedure of the geological map.

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4.0. SCOPE OF PROJECT This project was intended to be a regional geological and geophysical evaluation of the Talara and Tumbes Basins focusing on the identification of new deep pre-Eocene play types supported by seismic data. The focus was to examine the basins through the interpretation of digital seismic and well data sets, with each being tied to one another, using previously completed well datasets. However, reliable well data availability restricted our analysis to newly acquired and newly quality controlled datasets by the group in the offshore region, tied in as many places as possible with onshore well data. A more complete tie was obtained in the Tumbes Basin with seismic data of good quality and all wells completed in LAS format. Based on our past experience with the PARSEP Projects, the more time consuming aspects of this evaluation was the standardization and quality control of the data. Digital curve data was compiled and edited for the available digital wells especially wildcats in the Basin (Enclosures 1a, 1b and 1c). A composite log for each well was constructed, which if available included a Caliper, SP, Gamma Ray, Deep and Shallow Resistivity, Density, Neutron and Sonic curves. These composite logs are available as a LAS file as part of this report. A series of 20 stratigraphic and structural cross-sections shown in Figure 4 were constructed across the basins to standardize and reveal the stratigraphic relationships in the southern and northern Talara Basin and the Tumbes Basin (Enclosures 2a through 2t). Several flattened X-sections were prepared from these stratigraphic-structural cross sections in the Talara Basin and presented as part of these Enclosures. A standardized well database in Access was developed with standardized well tops, well data and other information when available, but it has not been completed on this stage of the project.

Regional and detailed geological and geophysical analyses that defined prospects and leads in the Talara and Tumbes Basins were prepared as part of the report. The Regional Tectonic settings in chapter 5.3 of this report is a summary of a more complete and detailed analysis of the tectonics presented in Spanish as Appendix 3. This regional context is a geometric and structural analysis of the two fore-arc basins based on the interpretation of 13 offshore seismic lines, three of which are tied to onshore seismic, well and surface geological data in the area north of the Mancora city (Enclosures 3a through 3p). The detailed seismic interpretation mapped five seismic horizons (Enclosures 4a through 4g) to define the Prospects and Leads Chapter 8.0 in conjunction with the prospects and leads also defined by the regional tectonics mentioned above. A total of 13 and 6 Prospects and Leads are documented with either the appropriate regional geological interpretations of seismic lines and/or seismic structural maps in the Tumbes and Talara Basins, respectively (Figures 55 to 92). In the Petroleum Geology in Chapter 7.0 the report includes a general discussion of available Geochemical data sets used also for burial modeling and attempting to define the petroleum systems. Hydrocarbon occurrences, maturity and analyses of potential source rocks in the different Cretaceous, Paleogene and Neogene formations are described. Reservoir, seals and traps and potential kitchen areas are also discussed. Thermal maturity and hydrocarbon generation modeling were conducted on four wells in the Talara Basin and two wells and a Pseudowell in the offshore Tumbes Basin

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(Figure 36). Appendix 1 includes a Geochemical database for the Talara and Tumbes Basins and the adjacent Lancones and Sechura Basins. The assemblage of these entire seismic, well, Geochemical data sets is one of the more notable accomplishments of this study. The geophysical analysis counted with good quality modern seismic. The eight surveys of 2D SEG-Y Digital Seismic Data represent coverage throughout most of the Basins (Figure 25 and Enclosures 1a, 1b and 1c). Additionally, the group edited 37 synthetic seismograms for wells in Talara and Tumbes Basins (1 onshore only). The 3D seismic analysis was not performed on the present evaluation.

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5.0. GEOLOGY OF THE TALARA AND TUMBES BASINS

5.1. Regional Geology The Talara and Tumbes Basins include thick sedimentary stratigraphic sequences of sediments of Paleozoic to Tertiary ages that extend offshore and onshore along the Coastal region far beyond the present basins. They merge and are part of the regional sedimentary succession characterizing all the Peruvian territory that eventually pinch out onto the Brazilian and Guyana Shields. The complex geological evolution of all these sequences is controlled by two regional tectonic systems recognized in the basins of Peru. The first, the pre-Andean System, encompasses three cycles of Ordovician, Devonian and Permo-Carboniferous ages overlying the Precambrian basement of the Guyana and Brazilian Shields. The second, the Andean System, was initiated with the beginning of subduction along the western margin of Peru. It encompasses several mega-stratigraphic sequences and numerous minor sedimentary cycles, ranging from Late Permian to the Present. The stratigraphic columns that have been used in the present report are representative of all NW Peru and are presented in Figure 2 and Figure 3. They show distinctive imprint of the tectonics and/or sedimentation history that dominated the NW coastal area greatly influenced by various pulses dominating the plate tectonics in this region. The base map presented as Enclosure 1d includes a surface geological map of the Talara and Tumbes Basins, north of the Chira River. This map has been provided by BPZ a current exploration company with licensees in the onshore north Talara Basin, onshore and offshore Tumbes Basin and negotiating a license contract for the whole Lancones Basin.

5.1.1. Pre-Andean System

The pre-Andean tectonic cycle includes Ordovician, Silurian, Devonian and the Permo-Carboniferous cycles all overlying crystalline/metamorphic Basement. This tectonic system preserved discontinuous successions of Ambo/Cabanillas/Contaya and a more continuous Tarma/Copacabana/ and Ene/Red Bed Groups, which reveal complex tectonics. This tectonism includes a possible pre-Cabanillas rifting and peneplanation and a late Permian uplift and erosional episode (PARSEP, 2002). Of all these successions only a portion of the Paleozoic represented by the Tarma Group consisting of 1,500 m. of quartzite, quartzitic sandstones, argillites and slate is preserved in NW Peru, possibly overlying a crystalline Basement. The Permo-Carboniferous cycle overlies unconformable the Devonian and/or Ordovician Cycles and Basement in the uplifted areas. This cycle has a widespread distribution throughout most of the Peruvian basins and neighboring basins bordering the Guyana and Brazilian shields. In the Peruvian basins, the earliest Carboniferous sedimentation is represented by the Ambo Group, which was deposited as continental to shallow marine, fine-grained sandstones, interbedded siltstones, gray shales, and occasional thin coal beds. These sediments are followed vertically by the thin transgressive, clastic-rich Tarma Formation, which is usually conformably overlain by the normally thick, massive dark gray, fossiliferous, shelf carbonates of the Copacabana Formation. The thick sequence of Copacabana limestones (wackestones, packstones and

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grainstones), and thin interbeds of dark gray shales and anhydrites are not recognized in the Talara and Tumbes Basins.

Figure 2. Stratigraphic Column of the Talara Basin. Figure modified from old IPC files.

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Figure 3. Stratigraphic Column of the Tumbes Basin. Figure modified from OXY (2000).

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5.1.2. Andean System The Andean System was initiated simultaneously with the beginning of subduction along the Pacific margin. A major change in the tectonic regime along the northwestern border of the South-American plate promoted isostatic rearrangements. In a global scale, the initial phase of the Andean System developed during the Pangea break up The development of the Andean subduction zone during late Permian to early Triassic times is supported by geological information gathered along the Peruvian Eastern Range, where they recognized a Permo-Triassic continental volcanic arc. (PARSEP, 2002). The Late Permian, Triassic to Jurassic tectono-stratigraphic sequence (equivalent Mitu/Ene, Pucara and Sarayaquillo of the sub-Andean basins) is absent due to non-deposition and/or erosion in the Talara and Tumbes Basins. Tectonic accommodation processes followed the late pre-Andean Tectonics coinciding and merging with a long time episode related to the regional Nevadan unconformity over which lies sediments of Cretaceous age, a generally well recognized regional first order sequence boundary. The Talara fore-arc Basin originated first as an individual basin during late Cretaceous and extended in time throughout Eocene time followed by the Tumbes Basin whose origin as a fore-arc Basin began in early Oligocene time. Inversion processes uplifted the western Marginal High (Amotape Mountains, Paita High, etc.) that restricted early Cretaceous deposition to the west of the Coastal Region. Oldest Cretaceous deposition in the Talara Basin records rocks of Aptian age and was characterized by a westerly wedge of marine to fluvial and marginal clastics. The Cretaceous deposition was again interrupted by non-deposition/erosion between Cenomanian and Santonian. Deposition resumed continuously during late Cretaceous Campanian and Maastrichtian, Paleocene, Eocene and early Oligocene, a long time episode represented by a continuous stratigraphic succession. This succession includes short time breaks marking the arrival of the first pulses of the Andean Orogeny (Peruvian and Incaic Phases) at which time through Eocene and early Oligocene time, siliciclastic-styled deposition dominated the Basin extending. This late sedimentation episode is represented in the Talara and Tumbes Basins from its current borders, which originally extended to the north to the Santa Elena area in Ecuador. Activation of oceanic crust some 26-27 my in the early late Oligocene time created several regional conditions of which we can mention: a) separation of the oceanic crust into the Cocos and Nazca plates, b) activation of the Banco Peru/Guayaquil/Dolores mega shear, c) this later faulting created conditions for the formation of the fore-arc Tumbes Basin in its present location with beginning of sedimentation since late Oligocene, and c) complete erosion of the early Oligocene sequences in the Talara Basin and final uplift to its current location. The continuous deposition since late-Oligocene time was punctuated in the Tumbes Basin with similar thick siliciclastic deposition during a time equivalent duration as in the Talara Basin. Locally, this plate tectonics migrated the fore-arc basin and sediments provenance northwards to originate the tectonic depression where the Tumbes Basin was emplaced.

5.2. Geology of the Talara and Tumbes Basins Project Area Detailed descriptions of the stratigraphy of the Talara and Tumbes Basins will be given to the reader. This stratigraphy is dominium of staff mostly working in these localized basins, which extend only into Ecuador and are not like the best-known sub-Andean

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Z-1XIX

III

Z-6

Z-2B

XII

2I

2H

2C 2

D

2G

2F

2E

2B

2A

2T

2T'

2S

2R

2Q

2P

2 O 2

N

2M 2L

2K

2J

TUMBES-T AL ARA BASINSGEOLOGI CAL MAP

450000

450000

500000

500000

550000

550000

600000

600000

9600000 9

9550000 9

9500000 9

9450000 9

9400000 9

Z-34

Z-38

Z-37

AREA VI

Figure 4: Location Map of Cross Sections in The Talara and Tumbes Basins. Enclosures 2

basins with continental distribution. Enclosures 2a through 2i and Enclosures 2p through 2s show the stratigraphic sections drilled in the Talara Basin, Enclosures 2j through 2o does so in the Tumbes Basin and Enclosure 2t is a regional section for the Talara and Tumbes Basins. The Enclosures in the Talara Basin also includes flattening in various levels to indicate the basin evolution at various ages. Figure 2 and Figure 3 show the stratigraphic columns in both basins.

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Sediments of Paleozoic, Mesozoic and Cenozoic age must rest over crystalline Basement. Since Paleozoic produce oil in two fields in the Talara Basin, we cannot define Paleozoic as economic Basement in the basin. Locally, it may be considered an effective Basement.

5.2.1. Basement

Granites drilled by wells PL-X-2 and PL-X-3 in the Carpitas area in the border of the Talara and Tumbes Basins and in the La Casita 55X in the Bayovar Bay in the south Talara Basin are assumed to correspond to the crystalline Basement.

5.2.2. Paleozoic Paleozoic metamorphic rocks and sediments are exposed in the Amotape Mountains and are known by drilling in the subsurface of the Talara Basin in as far locations as the Chira sub-basin and Bayovar Bay to the south and the Carpitas area to the north. The Paleozoic is locally named the Amotape Formation of Pennsylvanian age, possibly correlating with the Tarma Group of other Peruvian localities. The Paleozoic Sequence is made up of quartzite, slates and argillites intruded by granite in the Amotape Mountains. Prolific reservoirs were found in the Paleozoic section. Production from Paleozoic mainly fractured reservoirs was established on far extreme onshore locations on the north Laguna oil field in the Pea Negra High and south on the Portachuelo oil field and in the recent offshore San Pedro discovery. Detailed descriptions of the Paleozoic drilled in the Laguna Norte oil field were made since early field development in the 70s due to the excellent producing capacity of the metamorphosed Paleozoic sediments. Paleozoic is covered by shales of Cretaceous age in both onshore Paleozoic fields. Figure 5, Figure 6, Figure 7, Figure 8, and Figure 9 record the detailed Cretaceous and Paleozoic sediments drilled in the Laguna Norte oil field. Quartzites are light gray to white, very coarse to fine grained, sub rounded to subangular grains, fair sorting, with common quartz overgrowths and quartz veins, locally sugary with primary porosity, common micro fractures. Oil shows are observed in micro fractures, geodes and pores. Locally presence of metamorphosed poorly sorted greywacke, dark gray, coarse grained with silicified detrital matrix. Argillite is black to dark gray, normally with slickensides. Slate is gray to dark gray, dark gray green with fair to well developed cleavage. Paleozoic thickness is over 1,500 m. of which 280 m. were drilled in well 2294 the Laguna Norte oil field (Figure 8).

5.2.3. Cretaceous Sediments of Cretaceous age are known from outcrops and subsurface. They outcrop on lapping Paleozoic on the flanks of the Amotape Mountains, bordering the Lancones Basin and are known in subsurface from drilling in all the Talara Basin. Sediments of Cretaceous age have been drilled in the Talara Basin since several decades ago, onshore and offshore. Figure 5, Figure 6, Figure 7, Figure 8, and Figure 9 record the detailed Cretaceous and Paleozoic sediments drilled in the Laguna Norte oil field. In the Carpitas area to the north Cretaceous has not been found, since sediments of early Eocene rest unconformable over sediments of Paleozoic age.

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Figure 5. Paleozoic and Cretaceous in well EA 1875 in the Laguna Oil Field

28

Figure 6. Paleozoic and Cretaceous in well EA 2114-P in the Laguna Oil Field

Figure 7 Paleozoic and Cretaceous in well EA 1885 in the Laguna Oil Field

Figure 8. Paleozoic and Cretaceous in well EA 2294 in the Laguna Oil Field

Figure 8. Paleozoic and Cretaceous in well EA 2294 in the Laguna Oil Field

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The sediments of Cretaceous age were deposited in five stratigraphic sequences widely distributed in most of the Peruvian territory. In the Coastal Region, marine to continental and volcanic sequences separated from the eastern Cretaceous sub-Andean sequences by the Maraon Geanticline represent the Cretaceous succession. It is interpreted that the western extension of the Cretaceous sediments in the Coastal Region was partially controlled by a Paleozoic and pre-Cambrian? Marginal high, presently exposed or known as the La Brea/Amotape Mountains, Paita High, Illescas Mountains and several offshore islands. An incomplete organic rich carbonaceous and siliciclastic Cretaceous succession with a composite thickness of some 2500 m. extends west of the Marginal High in the area now occupied by the Talara Basin. The sediments of Cretaceous age are best known from outcrops in the Amotape Mountains Pazul Creek (Enclosure 1b), from drilling in the south offshore Chira sub-Basin (Enclosures 2a and 2b), in the offshore Bayovar Bay (Enclosure 2s) and from scattered drilling in the remaining onshore and offshore Talara Basin (Enclosure 2i). A mainly shale Cretaceous unit with calcareous imprint constitutes the seal for Paleozoic reservoirs in the Laguna oil field. Maximum drilled thickness amounts to 283 m. in this field. Similar dark brown shale with carbonates and conglomerates attributed to the Redondo Formation covers the Paleozoic Amotape Formation in the Portachuelo oil field. Three stratigraphic cycles are recognized in the Talara Basin or the NW Coastal Region west of the Marginal high. Each sequence starts with a basal conglomerate and shallows upward. The earliest Cretaceous sequence is absent. The oldest sequence in the basin is Sequence II represented by a regional transgression that deposited the Muerto Pananga Formations of Albian age. The Pananga Formation onlaps sediments of Paleozoic age, as observed in the Amotape Mountains. It is made of a basal calcareous sandstone and conglomerate unit with quartzite and slate boulders changing to reef-type fossiliferous and neritic crystalline limestones. The sequence culminates with development of widespread anoxic euxinic conditions characterizing the carbonate Muerto Formation. The Muerto Formation is characterized by deposition of black, argillaceous, fossiliferous limestones with strong petroleum odor on fractures and also with pelagic forams. Total thickness for this sequence amounts to 250 m. representing some 15 my. of Albian time deposition. Similar organic rich limestones are also observed in the southern Coastal Region (Pariatambo Formation). It should be mentioned here that the Raya Formation in the sub-Andean basins correlates regionally in age with the sediments of the Muerto Pananga Formations. Black shales, sandstones, occasional black limestones and volcanic rocks of the Copa Sombrero Formation represent sequence III of late Albian/Cenomanian/Turonian/ Coniacian age. This sequence is restricted to the Lancones and Sechura Basins in northwestern Peru, east of the Marginal High. A condensed section could represent sequence III in the Talara Basin. The Muerto Pananga Formations are separated by an unconformity and overlain by Sequence IV and V of Campanian/Maastrichtian age representing a transgression that marks the end of Cretaceous deposition in NW Peru. This upper Cretaceous section is made up of a siliciclastic interval that starts with the basal conglomerate Sandino Formation with round shale pebbles in a red to dark brown sandstone matrix underlying the black to gray and dark brown fossiliferous shales of the Redondo Formation. Sequence IV ends with deposition of sandstones and shales of the Monte Grande Formation. Some thicker sandstone and conglomerate units are interbedded with this

33

formation especially in the Chira sub-basin (south Talara Basin) and in the Sechura Basin where sediment source was close. Maximum thickness for Sandino, Redondo and Monte Grande Formations are 150, 950 and 300 m. deposited possibly in over 10 my. Sands, quartz and chert pebbles make up the conglomerates of the Ancha Formation representing the base of Sequence V of Maastrichtian age. This basal unit rests unconformable on the Monte Grande Formation and is overlain by shales of the Petacas Formation. Thickness for Ancha and Petacas is 250 and 750 m. representing some 5 my. of deposition during Maastrichtian time. In turn, Paleogene sediments superimpose the Cretaceous section in the Talara Basin and a thick stratigraphic column of Neogene sediments overlies the Paleogene and Cretaceous, if present, sediments in the Tumbes Basin. Sediments possibly from the Redondo and/or Muerto Pananga Formations overly meta sediments of Paleozoic age in the onshore Laguna Norte and Portachuelo oil fields, located on the northernmost and southernmost portion of the onshore Talara Basin, respectively (Figure 5, Figure 6, Figure 7, Figure 8, Figure 9). In the Laguna Norte oil field, the Cretaceous section consists of a sequence of dark brown shales, marls and calcareous sandstone. The Cretaceous section provides an excellent seal for the underlying producing Paleozoic quartzite reservoirs. Maximum thickness drilled is 283m in well 1885 (Figure 7). South from Portachuelo in the offshore Chira sub-Basin and bordering the Paita High, Petro-Tech Peruana S.A. is actively exploring the offshore Chira sub-Basin. Drilling in the 70s and 80s discovered a productive Cretaceous siliciclastic and carbonaceous column in a thick Cretaceous section. Seismic acquired in the late 90s by Petro-Tech Peruana S.A. defined over 1200m. of Cretaceous sediments. In all these occurrences the carbonates of the Muerto and Pananga Formations overly the Paleozoic sediments, possibly preserved from erosion in original grabens, and now representing inverted sections. This Cretaceous section overlying the Muerto Pananga Formations consists of the Sandino conglomerate made of volcanic boulders. Overlying Sandino there is a thick shale and conglomerate sequence made up of quartzite and volcanics attributed to the Redondo Formation. Provenance for the Cretaceous succession is very likely to be the Marginal High described above and represented locally by the Paita High. This structural high has been active or it has been exposed during the basin history. Well PHX-A on the flank of this high has Paleozoic with normal poor oil shows underlying the Salina Formation with all cretaceous section absent and in turn overlain by Verdun Formation. Further south in the Bayovar Bay, the La Casita 55X well drilled the following stratigraphic section underlying a Tertiary Oligocene and Eocene sequence (Enclosure 2s):

? ? Balcones Formation of Paleocene age (top at 2426 m. thickness: 198 m.). ? ? Monte Grande of Maastrichtian age (top at 2621m., thickness: 372m.). ? ? Redondo Fm. of Campanian age (top at 2993m., thickness: 335m.). ? ? All above section overlies what has been described as white quartzites of the

Amotape Formation (top at 3322m., thickness: 6m.) and a Plutonic Igneous Basement (top at 3328, thickness: 27 m.)

The Monte Grande Formation consists of shales, dark gray, micaceous, carbonaceous with sandstone streaks white, fine to medium grained, sub rounded, well sorted, quartz,

34

feldspars and quartzite grains. Identified by long ranging Cretaceous-Paleocene forams, dominated by arenaceous forams found in the overlying Balcones Formation. Some Cretaceous Redondo Formation micro fauna assemblages occur at the base of the Monte Grande Formation. Palynilogical determinations of Cretaceous assemblage are also found in this formation. Mega fauna represents a shallow marine environment probably deposited in the outer neritic zone. The Redondo Formation is a monotonous thick sequence of shales dark gray, black and dark brown, micaceous, with calcite grains in shales, bedded limestones is not present. Abundant suite of arenaceous and calcareous of the Siphogenerinoides genus predominates in this formation. Campanian-lower Maastrichtian age is given by the joint occurrence of S. bramletti and S. parva and the planktonic glumbelina globulosa. The highly foraminiferal contents and assemblages suggest a single sequence of transgression and regression in a mostly outer neritic environment. The end of Cretaceous deposition marks the initiation of the major uplift episode of the Andean Orogeny. Detailed stratigraphic studies are limited to clearly define the known Cretaceous succession in the Talara Basin.

5.2.4. Cenozoic

5.2.4.1. Tertiary The Talara and Tumbes Basins constitute two fore-arc basins each with a very thick sedimentary section, mostly of different Tertiary ages. The stratigraphy of both basins described in this report will cover only the portions present in Peru, up to Eocene age in the Talara Basin and from late Oligocene to present time in the Tumbes Basin. Basin modeling indicates that an early Oligocene section has been completed eroded in the Talara Basin. Sediment source for the Talara Basin to the east deposited from 9,700 to 7,900 m. of sediments of Paleocene and Eocene ages above the Cretaceous in 30 my. Major tectonic episodes created accommodations of the Cocos and Nazca Plates and in the South American Plate overriding the subduction oceanic crust. The primary result was the changes of sea level and/or uplift of the Talara Basin and the formation of the Tumbes depression that migrated the geographical basin or sediment source for the Post-Eocene sediments northwards to a depression that created the Tumbes Basin. The Tumbes Basin was also the site of very rapid sedimentation of 6,600 m. offshore to 7,200 m. onshore of Oligocene, Miocene and Pliocene sediments in 35 my. The Tumbes and Zarumilla Rivers in the Tumbes Basin have currently very active delta fronts near the Ecuadorian border and also smaller creeks carry enormous amounts of sediments into the offshore Talara and Tumbes Basins. Similar proto Tumbes- and Zarumilla-like Rivers possibly were also very active carrying sediments to the Talara Basin during Eocene time before they migrated to their actual location. The stratigraphic descriptions for the sequences of each basin will be treated separately, since age of sediments vary notably from one basin to another.

5.2.4.2. TALARA BASIN In the Talara Basin, the Tertiary Paleocene and Eocene stratigraphic sequences includes sediments from Cone Hill to Mesa Formations (Figure 2). The composite overall thickness of 9,700 m. decreases to 7,900 m. from the south Talara/Portachuelo area to the Pea Negra area to the north. A very thin section, 500 m. between Oligocene and

35

Basement observed in seismic can be attributed to a section of comparable age in the southern offshore Tumbes Basin. The Tertiary section in the Talara Basin was deposited in four major sequences of third order comprising one of Paleocene and three of Eocene ages.

? ? Paleocene Sequence Early Tertiary sedimentation began with deposition of the Mal Paso Group of Paleocene Danian age unconformable overlying the Cretaceous Petacas Formation. The Paleocene Mesa and Balcones constitutes the basal and oldest Tertiary sequence. Previous literature extend down in time the Mal Paso Group to include Cretaceous Sequence V Ancha and Petacas Formations, but in this report the group will only refer to the Paleocene Mesa and Balcones Formations. It should be noted, however, that in some portions of the Talara Basin there existed a rather continuous deposition and transition with relative short time breaks during deposition of the late Cretaceous and early Tertiary Paleocene sequences containing the Redondo, Petacas and Balcones Formations, all of them with similar lithology. The Mal Paso Group partially outcrops in the Paita High area, although is best known in subsurface. The group is made up of the basal sandy Mesa Formation underlying the Balcones Formation black shales rich in foraminifer micro fauna. Thickness of the Mal Paso Sequence is