The Sangaw North #1 exploration well is drilling ahead at 2,927m. Drilling operations remain challenging with two sidetracks undertaken to drill past an open-hole testing packer that could not be retrieved and a bottom hole drilling assembly that became mechanically stuck. The well has drilled through several prospective Cretaceous reservoirs, two of which were flow tested.
DST #1 tested an open-hole interval within the Cretaceous Kometan formation. During a 6-hour flow period, an initial recovery of gas was followed by flowing water with minor gas content.
DST #2 tested an open-hole interval of the Cretaceous Shiranish formation. The well produced gas at an estimated flow rate of 4 million standard cubic feet per day (mmscfd) along with some drilling fluids. However the gas flow subsequently decreased and was followed by water, believed to be formation water, flowing at an estimated rate of 4,300 barrels per day. During a second flow period, the well initially flowed water and then produced gas at an estimated flow rate of 1 mmscfd. The gas flow again decreased and was replaced with water at an estimated rate of 750 barrels per day.
Below these Cretaceous horizons lie additional prospective Jurassic reservoirs which are planned to be evaluated. Sterling's best estimate of oil-in-place for the Jurassic and Triassic reservoir targets is 3 billion barrels (an estimate that RISC supported as reasonable). Assuming a 20% recovery factor, the prospective resources for the Jurassic and Triassic is 600 million barrels of oil. RISC estimates the geological chance of success at around 10% and considers that gas and condensate are at least as likely to be discovered as oil.
The Sangaw North #1 exploration well is expected to reach its target depth by the end of the 4th quarter of 2010.