Exploration/Development Briefs

July 8, 2013

Egypt

A group led by Vegas Oil & Gas has tested its Al Amir SE-17 development well at 3,664 b/d of oil and spudded the Shehab-2 exploratory well, both on the Northwest Gemsa concession onshore Egypt's Gulf of Suez basin 300 km southeast of Cairo.

The company is producing Al Amir SE-17 at 1,134 b/d of oil and 1.31 MMscfd on a 24⁄64-in. choke from Shagar perforations at 9,560-80 ft. The higher-rate test measured 800 psi flowing wellhead pressure on an 8⁄64-in. choke. TD is 9,905 ft.

Log analysis indicates 12 ft of Shagar net pay and 16 ft of Rahmi net oil pay. Production from the concession is restricted by surface off-take facility constraints and will be limited to 12,500 b/d of oil until field improvement projects have been completed.

Shehab-2, 2 km north of Geyad field, is projected to the Kareem horizon at 5,000 ft. Drilling and completion time is estimated at 30-40 days.

NW Gemsa working interests are Vegas Oil & Gas 50%, Circle Oil PLC 40%, and Sea Dragon Energy Inc. 10%.

Sea Dragon noted that its net production in Egypt averaged 1,933 b/d of oil equivalent in May 2013 including 1,245 boe/d net from NW Gemsa, 206 b/d of oil from the Kom Ombo concession, and 482 b/d of oil from Shukheir Marine field.

Israel

Adira Energy Ltd., Toronto, said its Israel subsidiary entered into a settlement and release agreement with Modi'in Energy LP and Brownstone Energy Inc. that resolves the companies' previously disclosed disputes over their respective funding obligations and related suspension of operations on the Gabriella license nearshore Israel.

The companies agree to waive and release each other from any claims and demands they may have with respect to the license and will fund their proportionate share of costs associated with the license incurred in connection with the attempted drilling of the first well.

The agreement is subject to Modi'in unitholder approval, which is expected to be received within 10 days. Adira's net share of the costs total $3.2 million and is payable in stages over a 90-day period after Modi'in unitholder approval.

Adira noted that despite confirming contingent resources on Gabriella and having a drilling rig on site, the companies were unable to execute the drill program. Adira is assessing finance options to maintain its interest in the license.

The agreement also provides the companies with tag-along rights for 1 year to participate in any farmout of their participating interests in the Gabriella license consummated by the other members. In addition, Adira agrees to relinquish its 15% buy back option and management fee and reduce its overriding royalty interest to 2.625%.

In the event that Adira does not pay its share of abovementioned costs, at Modi'in's request, Adira may withdraw from the joint operating agreement and assign its participating interest in Gabriella to the remaining participants and will relinquish its remaining royalties.

Adira on June 30 applied to Israel's Ministry of Energy and Water for an extension of the dates for the execution of a drilling contract on Gabriella to Feb. 28, 2014, and for the spud of the first well to Dec. 31, 2014. It also applied for an extension of the dates for the execution of a drilling contract on the Yitzhak license off Israel to Sept. 30, 2014, and for the spud of the first well to June 30, 2015.

Liberia

Tullow Oil PLC in mid-June relinquished its interests in the LB-16 and LB-17 blocks offshore Liberia after completing a detailed review of results to date from its acreage across the West Africa Transform Margin.

Tullow retains its interest in Block LB-15 off Liberia and Block SL-07B-11 off Sierra Leone but for now will focus its attention on the Ivory Coast and Guinea campaigns in the region.

Madagascar

Oyster Oil & Gas Ltd., Vancouver, BC, reached agreement to acquire the 10% interest held by Candax Energy Inc., Toronto, in Block 1101 onshore Madagascar.

The deal is subject to completion of due diligence, exchange approval, and Madagascar government approval.

Oyster said that along with Afren PLC, operator of Block 1101, it will be "undertaking a 2013-14 work program that includes high impact exploration activity and a drilling program scheduled within the next 12 months."

Oyster is operator of four onshore and offshore blocks that total 3.5 million acres in Djibouti. It also has the option to acquire as much as a 60% interest in the Kalum property in British Columbia.

Namibia

Westbridge Energy Corp., Vancouver, BC, has completed the previously announced acquisition of a 75% interest with Ropat Petroleum Investments (Pty.) Ltd. in the 1910A Relinquished, 1911A Relinquished, 1912B and 2011A Relinquished oil and gas exploration licenses offshore Namibia.

The transaction increases Westbridge's total contiguous acreage in the Walvis basin off Namibia by 284% to 22,484 sq km. The licenses are an extension to Westbridge's existing Block 1811B and more importantly contain oil shows in the 1911/15-1 well drilled in 1994.

Westbridge's five blocks are 180 km north of the recent technical discovery in the Walvis basin by a Brazilian independent oil company, which demonstrates a potentially extensive and working petroleum system between the two wells, Westbridge said (OGJ Online, May 22, 2013).

Westbridge will be operator of the licenses with a 75% interest. Ropat will have a 15% carried interest, and the remaining 10% will be a carried interest held by Namibia's state NAMCOR. Ropat is a private oil and gas company incorporated in Namibia.

Nigeria

Afren PLC said its Ogo-1 well near shore western Nigeria is a large light oil discovery in the same Cretaceous sandstones that have yielded other significant discoveries along the West Africa transform margin.

Several high-potential formations remain to be drilled, Afren noted, with the well at 10,518 ft measured total depth, 10,402 true vertical depth, and headed for a final depth of 11,800 ft MD, 11,684 ft TVD. Ogo-1 is on the OPL 310 license not far east of Nigeria's marine boundary with Benin.

It will then be sidetracked to test a new play of stratigraphically trapped sediments that pinch out onto the basement high targeting 124 million bbl of oil equivalent of gross P50 prospective resources.

Ogo-1 encountered a gross hydrocarbon section of 524 ft with 216 ft of net stacked pay. The well is testing a four-way dip closed structure in the Turonian, Cenomanian, and Albian sandstone reservoirs.

Afren said, "The well was targeting 78 million boe of gross P50 prospective resources, but based on evidence to date, targeted resources are likely to be significantly in excess of previous estimates. Further evaluation using wireline log analysis is currently under way…."

Economic interests in OPL 310 are Afren 40%, Optimum 30%, and Lekoil Ltd. 30%. Participating interests are Optimum 60%, Afren 22.86%, and Lekoil 17.14%.