WILDCATS SLATED DURING 1995 IN EASTERN MONGOLIA

Exploratory drilling is scheduled to start in eastern Mongolia in second quarter 1995.

Snyder Oil Corp., Fort Worth, took an Indonesian partner for the exploration program and signed an agreement under which a Chinese company will purchase crude oil if discovered.

Snyder formed SOCO Tamtsag Mongolia Inc., in which Snyder will be the majority shareholder and operator. PT BIP Energimas, the oil and gas subsidiary of PT Bhuwanatala Indah Permai, a public Indonesian company, will become a major shareholder in SOCO Tamtsag.

Energimas committed to fund the drilling of two 3,400 m wells, the first of which is to spud in second quarter 1995. Another company, Medallion Mongolia Oil Co., Houston, assigned its interest in Block XIX to Snyder and retains a revenue interest in the venture.

The proposed 3,400 m depth is thought sufficient to reach postulated economic basement on seismic structures in the Tamtsag-Hailar basin, said William Penttila, president of Exploration Associates International of Texas Inc., Houston, which has been assisting Snyder.

The wells likely will be drilled by a Chinese rig owned by Huabei Petroleum Administration Bureau in Hebei. The rig would be moved from the Aershan fields in the Erlian basin of Inner Mongolia, which produce about 20,000 b/d of oil, Penttila said.

The wells are to be drilled on as yet unselected structures in the southeast part of Block XIX. Main objectives are lower Cretaceous and possibly upper Jurassic sandstones.

Seismic surveys have identified large structures in a geologic setting Snyder said seems analogous to China's Songliao basin, which contains supergiant Daqing field. The seismic crew working for Snyder will begin acquiring data next March in Area XXII.

Addition of Block XIX brings Snyder's Mongolian land position to 5.3 million acres.

CRUDE PURCHASE

Snyder signed another agreement under which China National United Oil Corp. (Cnuoc) will buy any crude produced in the Tamtsag basin. Cnuoc is a joint venture established under Chinese law between state owned China National Petroleum Corp. and Sinochem.

Cnuoc agreed to purchase at a mutually agreed Mongolia-China border point any crude produced by SOCO Tamtsag at world price less a fixed $2/bbl transportation charge and a quality differential.

The Chinese said they will process the crude at an idle 35,000 b/d refinery in the city of Hailar, about 200 miles northeast of SOCO's initial drillsites, Penttila said.

Local officials apparently commissioned construction of the refinery to process Hailar basin crude that has not materialized.

The Hailar-Tamtsag basin contains about 30 wells, mostly in China, Penttila said. One is Mongolia's deepest well, the Pl well on Block 21, drilled to 2,500 m.

Issue date: 12/26/94