Eurogas International Inc

TUNISIA: 06/29/2017 10:02:30 AM
ALBERTA: 06/29/2017 3:02:30 AM

Exploration and Development

Sfax Exploration Permit

The 1.0-million-acre Sfax Offshore Exploration Permit is located within a hydrocarbon fairway that trends from offshore Libya, through the Gulf of Gabes, to onshore Tunisia and includes several major oil and gas fields. The Sfax permit is bordered by producing oil and natural gas fields to the west, north and east, including the 330-million-barrel Ashtart oil field adjacent to the southeast boundary. Over the past 40 years, previous operators drilled and flow-tested oil from three separate structures on the Sfax permit at daily equivalent rates of 600, 1,200 and 1,800 barrels of oil per day. At that time, the operators considered these structures sub-economic and the wells were abandoned.

In July 2003, the Tunisian government awarded the Sfax Offshore Prospecting Licence to EII and Atlas Petroleum Exploration Worldwide Ltd. (“APEX”), a subsidiary of Gaither Petroleum Corporation of Houston, Texas. The licence was converted to an exploration permit in June 2005 with a commitment to undertake seismic work and to drill one exploration well prior to December 9, 2009. The REB3 well was drilled in 2008 and satisfied the drilling commitment for the permit. Subsequently, the partners requested and were granted a two-year extension taking the permit’s primary term to December 8, 2011. Formal gazetting of the extension is expected to occur in the near future. The extension requires that one new exploration well be drilled prior to the permit’s expiry.

Ras El Besh Prospect

The Ras El Besh prospect is a 16,802-acre area carved out of the Sfax Permit. The partners received a Development Concession over the Ras El Besh prospect in July 2008, which has a term of 30 years with a condition that development start within two years. The REB3 well was recognized by the Tunisian government as the commitment well under the terms of the Sfax Offshore Exploration Permit.

Drilling began at REB3 on June 16, 2008 and reached total depth of 2,204 metres. The primary target El Garia Formation was 80 metres thick and showed oil; however, the reservoir was tight and no tests were conducted. The secondary target Reineche Formation provided positive results. Well logs and formation pressure tests identified the presence of oil in a high-quality, 10-metre-thick carbonate interval, which was subsequently confirmed by down-hole sampling.

The well was plugged back and a second wellbore (REB3H-ST1) was side-tracked to determine the size and productivity of the reservoir. The new wellbore drilled through a fault that lowered the top of the targeted formation by 15 metres from the mapped depth, and drilling continued through approximately 400 metres of porous limestones in the Reineche Formation. The open hole section flow tested at a rate of 1,000 barrels per day of total fluid with a 10 percent oil cut. The partners are encouraged by the tests of oil from two locations 1,000 metres apart. Further drilling will be delayed until the sub-surface is re-mapped to incorporate the new REB3 well data and reprocessed seismic.

Partners requested and received approval from the Tunisian government on October 23, 2008 to temporarily suspend REB3 subject to abandoning or re-entering the well within 6 months. In April 2009, the operator submitted a request to the Tunisian authorities to delay the abandonment decision so partners have sufficient time to re-map the Reineche structure, after which a decision will be made to re-enter or abandon REB3. In the event of abandonment, the cost is estimated to be US$6.5 million.

Salloum Prospect

The Corporation is evaluating the Salloum oil prospect as a future drilling candidate on the Sfax permit. A previous operator drilled an exploration well (SAM1) located 1.5 kilometres off the east coast of Tunisia in 1991 and tested 1,800 barrels per day of 42° API oil from Bireno limestones.

This structure is located in the northwest corner of the Sfax permit in shallow waters adjacent to the city of Sfax and is within 10 kilometres of two oil fields that have produced over 25 million barrels of oil from the same Bireno limestones. In 2007, EII and APEX acquired and processed 60 square kilometres of shallow-water 3D seismic over this prospect. Preliminary mapping suggests the Salloum structure extends toward the shoreline and could be drilled from an onshore location, which should result in significant cost savings compared to drilling an offshore well.

Jawhara Prospect

The Jawhara oil prospect, located approximately 30 kilometres south of Ras El Besh, was drilled for the first time in 1973 by Total S.A. (JAW1), testing oil to surface at an equivalent rate of 1,200 barrels of oil per day from Douleb-Bireno limestones of Cretaceous age. The Jawhara complex is a series of southwest to northeast fault blocks that are the first structures out of the basin to the east. JAW1 tested oil from the southern-most fault block and additional drilling is required to confirm the northern extent of the trend.

The 2009 program to re-map the Ras El Besh structure will extend southward to cover lands over the Jawhara prospect. Revised geological mapping will attempt to ascertain whether the Jawhara structure could hold sufficient hydrocarbon volumes to warrant an appraisal well.

Other Prospects

Additional hydrocarbon leads have been identified in the southeast and northwest portions of the 1-million-acre Sfax permit. The 330-million-barrel Ashtart oil field is adjacent to the southeast boundary of the Sfax permit and several similar structures in the area remain undrilled. In addition, several potentially 5-50-million-barrel structures have been identified in the northwest portion of the permit after partners mapped the 948 square kilometres of 3D seismic acquired since 2004.