Fastnet, the listed E&P company focussed on exploration activities in Morocco and in the Celtic Sea, is pleased to announce that an independent assessment of eight Exploration Permits comprising the Tendrara Lakbir Petroleum Agreement (the "Tendrara-Lakbir Licence") onshore Morocco has been completed by SLR Consulting ("SLR"). As announced on 29 May 2013, Fastnet entered into an exclusive option agreement with Oil and Gas Investment Funds ("OGIF") to farm into the Tendrara-Lakbir Licence through its wholly owned subsidiary Pathfinder Hydrocarbon Ventures Limited.
Highlights:
· New study by specialist Houston-based NuTech petrophysical team quantifies reservoir properties for the Triassic TAGI Sand consistent with good potential gas flow rates from a gross gas-bearing interval in TE-5 of 82.2 meters.
· New reservoir engineering study by John Tingas PhD, MSc, Independent Petroleum Engineer, supports development cases, subject to a successful validation of flow rates in an appraisal well on the TE-5 discovery and a step-out appraisal well to the northeast of the TE-5.
· New well design study by Dennis Krahn, Chartered Petroleum Engineer, Summit Upstream, supports the enhanced well potential by designing and drilling a conventional appraisal well using modern technologies to minimise and, preferably, eliminate the formation damage seen in previous drilling/testing operations which negatively impacted the well's gas flow rate potential.
· New Independent Resources Estimates by SLR, based on these desk top studies and a review of historical published estimates, that were not previously validated by an independent Competent Persons Report, give resource estimates, based on a 65% recovery factor.
· "Running Room" has also been identified in five additional gas prospects.
The SLR report provides an independent assessment and verification of previously published historical resource estimates for the area covered by the Tendrara-Lakbir Licence prior to Fastnet exercising an option to drill an appraisal in 2014 and executing a rig contract. In addition, ahead of drilling the Company also wished to explore the potential options to monetise the discovered gas in the TE-5 - Lakbir Structure by:
· Determining the theoretical gas flow rates from the proven gas reservoirs;
· Optimizing the well design to assist with achieving the maximum potential theoretical flow rates by limiting formation damage whilst drilling, completing and testing;
· Seismic re-mapping to assess potential compartmentalization risks within the larger TE-5 - Lakbir Structure; and
· Establishing an outline development plan based on different production profiles to assess the range of field deliver abilities and their impact on any infrastructure and gas demand constraints.
The Company recognises that a successful early appraisal of the TE-5 - Lakbir Structure by Fastnet and its partners ONHYM and OGIF has important implications for the strategic planning of Morocco's future gas requirements and the location of new gas-fired power plants. It will enable the validation of the potential Contingent Resources and the potential production profile for any field development scenarios. For this reason early confirmation of the potential scope of the TE-5 - Lakbir Structure to provide indigenous gas to the developing Gas-to-Power options is critical.
Fastnet has completed a series of desktop studies, detailed below, to address these issues and to provide new data for the Independent Resources Report by SLR, on the basis of which the historical published estimates of resources can be assessed and validated.
A study by a specialist Houston-based NuTech petrophysical team has quantified reservoir properties for the Triassic TAGI Sand that are consistent with a good potential gas flow rate from a gross gas-bearing interval in TE-5 of 82.2 meters. Significantly an independent petrophysical study has also shown that there is no gas-water contact in the TE-5 well.
New seismic depth mapping has shown that the formerly designated TE-5, Lakbir and TE-NE Structures are potentially a single structure with a common gas-water contact in the P50 and P10 Contingent Resources Estimates. This will require verification by a long step-out appraisal well.
Critically this work identifies formation damage as a significant issue in previous drilling and testing on the structure, which limited absolute gas flow potential from the TE-5 well. In addition, the study identifies that the nature of the permeability characteristics of the TAGI reservoir interval does not facilitate exploitation by horizontal drilling. Furthermore a significant conclusion of the study is that surface compression in a development scenario will reduce wellhead pressures and potentially accelerate recovery of gas.
Preliminary scoping cost estimates for the above Low, Best and High case development scenarios are provided that allow for scoping economics to be performed for each case.
An appraisal well to the TE-5 gas discovery will be required first to validate the potential well deliverability in order to re-calibrate the above potential field production profiles.
A new well design study by Dennis Krahn, Chartered Petroleum Engineer, Summit Upstream, supports the enhanced well potential by designing and drilling a conventional appraisal well using modern technologies to minimise and, preferably, eliminate the formation damage seen in previous drilling operations which impacted previous gas flow rate potential. Scoping well costs have been determined based on the design and equipment criteria necessary for optimising drilling operations to ensure good deliverability from the TAGI reservoirs.
Commenting, Paul Griffiths, Managing Director of Fastnet, said:
"We are pleased that our decision to undertake a series of comprehensive desk-top studies by key specialists with experience and proven track records has been justified by the independent verification of the potential Contingent Resources for the TE-5 - Lakbir Structure. This has provided us with invaluable insight to understand and address the important historical issues related to drilling and completion operations, reservoir quality, reservoir engineering, well performance and the potential for structural compartmentalization that may have held back the exploitation of the TAGI gas reservoir in the past. An important step in validating the resources potential will be an appraisal well in 2014. It is designed to optimize the flow potential from the TAGI by minimising formation damage as well as collecting high quality flow rate and pressure data with which to validate and re-calibrate the current reservoir engineering studies. We are excited about the drilling of this project as we continue to deliver on our "early mover" strategy. We have again successfully identified and quickly secured dormant high-impact opportunities with latent potential to deliver at the higher end of conventional expectations. Our seasoned technical expertise allowed us to de-risk the asset by addressing key historical issues paving the way to a fast-moving drilling programme based on a sound assessment of geological and well operations risks."
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