E&D CAMPAIGN UNDER WAY ON CRIMEAN BLOCK

Crimean Exploration/Development Area. (50370 bytes)

A unit of OTM International Development, Vancouver, B.C., has kicked off an exploration and development program on a large tract in Ukraine's Crimea.

Drilling has begun on an 11,000 sq mile area on the Crimean Peninsula held under a production sharing agreement (PSA) between OTM unit HHO Ltd. and Krymgeologia, Simferopol, Crimea.

Krymgeologia is a state owned Ukrainian enterprise that has conducted all exploration and development in the area for the past 50 years.

HHO, a privately owned company based in Jersey, Channel Islands, operates and will obtain its share of oil through KrymTexasNafta Ltd. a Ukrainian joint venture.

The PSA!s production phase is to last 25 years.

Agencies of the former Soviet Union established the prospectivity of HHO's PSA acreage. Soviet crews found an estimated 18 million bbl of oil in several shallow reservoirs in the region but didn't uniformly delineate or develop the discoveries.

HHO plans to use modem technology to prove, increase, and produce the reserves.

First on HHO's Crimea agenda is bringing Aktash field into full production during second half 1995- Already well delineated by the Soviets, Aktash field's reserves are estimated at 12 million bbl.

HHO early this month spudded a well in the field and plans a 2-3 week production test after reaching total depth.

OTHER E&D OBJECTIVES

After the start of Aktash production, HHO plans to begin similar reserves reassessment and development programs in several other shallow fields nearby with combined reserves estimated at 6 million bbl.

Like Aktash, all the fields' pays lie at depths of less than 3,000 ft. Based on its analysis of Soviet and Ukrainian data, OTM said deeper, untested strata in the fields likely have significant oil and gas potential.

Meantime, OTM is evaluating other oil and gas discoveries in the region, where it plans to begin developing four other fields in the next 5 years. Preliminary plans include working over two wells in Fontanov gas-condensate field, each of which flowed more than 14 MMcfd of gas and several hundred barrels of condensate on tests.

HHO's PSA with Krymgeologia allows OTM to take as much as 50% of produced oil to recover costs, with the remaining oil to be split 60% to the company and 40% to the state.

OTM in part is financing the first phase of the E&D program with $2.2 million (Canadian) raised through a private offering of stock and warrants.

In addition to specific field development plans, OTM officials have approved $65 million (Canadian) for an exploration and evaluation pro- gram to run through 1999.

OTM is seeking participants either as farmout operators or joint venture partners.