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Addax Petroleum acquires interest, Shakal-1 bit
spins in Iraqi Kurdistan region
9.10.2008
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October
9, 2008
Erbil-Hewler, Kurdistan region "Iraq", —
Addax Petroleum Corporation has acquired a 33.33 per
cent interest in the Sangaw North Production Sharing
Contract. The Sangaw North license area is operated
by Sterling Energy plc and is located approximately
80 kilometers southeast of the Corporation's Taq Taq
field.
Commenting today, Addax Petroleum's President and
Chief Executive Officer, Jean Claude Gandur, said:
"We are pleased to expand our activities in the
Kurdistan Region of Iraq to include the highly
prospective Sangaw North license area. Given our
successful drilling campaign at Taq Taq,www.ekurd.net
we intend to assist our
partner to expedite exploration drilling. We believe
that exploration success at Sangaw North would offer
attractive synergies with the development of Taq Taq
for the benefit of all the people of Iraq and our
shareholders."
The Sangaw North PSC covers a gross area of
approximately 121,600 acres (492 km(2)). Petroleum
exploration activity to date includes field studies
and the acquisition of 310 km of 2D seismic which is
expected to be completed in November of this year.
The Sangaw North license area contains a large
surface anticline, a number of surface oil seeps and
the operator is targeting to spud an exploration
well in mid-2009.
The Sangaw North PSC is subject to an assignment to
the Korean National Oil Corporation which, when
completed, will reduce the Corporation's interest to
26.67 per cent. In addition, the Kurdistan Regional
Government (KRG) has the right to require that at a
future date a government nominated entity is
assigned 25 per cent which, if exercised, will
further reduce the Corporation's interest to 20 per
cent.
Under the terms of the acquisition,www.ekurd.net
the consideration from
Addax Petroleum comprises the reimbursement of
Sterling's past costs as well as funding the seismic
campaign and the drilling of the first exploration
well. This reimbursement is funded from the
Corporation's existing financing facilities and the
future costs will be included in the Corporation's
2009 capital budget which is expected to be funded
entirely from the Corporation's funds flow from
operations. The Corporation continues to have
substantial funding capacity within its existing
financing facilities.
Shakal-1 bit spins in
Kurdistan
Australian-listed Oil Search said that the Shakal-1
well has been spudded which is targeting a large
sub-thrust anticline in the Kurdistan region of
Iraq.
The primary objectives of the well are Tertiary and
Cretaceous reservoirs similar to those in nearby
discoveries.
The 632 kilometre Shakal Block lies in the
south-eastern fairway of the prolific Zagros Fold
belt of Kurdistan, immediately south-east and on
trend with the Pulkhana field,www.ekurd.net
which has reported
proven and probable reserves of around 300 million
barrels of oil. Studies suggest the Pulkhana
structure could extend into the Shakal Block.
Oil Search estimates that the block has the
potential to contain mean unrisked recoverable
reserves of some 250 million barrels, either in a
separate structure or as a continuation of the
Pulkhana field.
The planned total depth of the well is 3350 metres
and it is expected to take about 60 days to drill.
In line with Kurdistan Regional Government (KRG)
requirements, Shakal-1 is being drilled as a tight
hole.
In terms of revenue interest, Shakal Production as
the operator will take a 36% cut, followed by the
KRG on 20%, Oil Search with 15%, Petoil on 9% and
the remaining unassigned 20% stake is also held by
the KRG.
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