Valeura Energy Converts Banarli Licence to 2 New Licences & Completes New 3D Seismic

Source: 7/7/2015, Location: Europe

Valeura Energy has announced that the General Directorate of Petroleum Affairs of the Republic of Turkey ('GDPA') has approved the Corporation's application to convert its 100% owned Banarli Exploration Licence 5104 in the Thrace Basin to the licencing terms under Turkey's new petroleum law adopted on June 30, 2013 . As a result, the Banarli licence acquired in April 2013 has been converted to two new contiguous exploration licences, adapted to a new grid system, with a total area of 542 sq kms or 133,840 acres, representing a 13% increase in the area of the original single licence.

The Corporation has also advised that it completed the acquisition phase of a new 3D seismic survey at Banarli. The seismic covers an area of 152 sq kms, which satisfies the seismic requirement in the initial term of the new licences. The total all-in cost to acquire, process and interpret the seismic is estimated at $5.0 million . Processing and interpretation of the seismic is underway and should be completed by early September to position potential drilling at Banarli as early as the fourth quarter of 2015, contingent on the 3D seismic results and the Corporation's cash position at the time. Under the new licencing terms, an initial commitment well will need to be spudded by June 26, 2016.

'We are pleased that the Banarli licence has been successfully converted to new terms and the licence evaluation program is proceeding as planned with completion of the 3D seismic program as a key first step', said Jim McFarland , President and Chief Executive Officer. 'We believe that Banarli offers significant exploration upside potential both in terms of the extension of the successful conventional gas and unconventional tight gas plays under development just south of Banarli on our joint venture lands, and in a potential basin-centered gas play at depths below about 2,500 metres.'

Banarli Licencing Terms
As a result of the successful conversion process, the initial five-year term of the original Banarli licence has been extended by more than two years to June 27, 2020 . During the initial five-year term, Valeura will be required to complete, in aggregate on the two licences, 152 square kilometres of 3D seismic and three wells, including a 2,000 metre well in each of year one and year two and a 3,800 metre well in year four. The total assigned value to this program is US$9.15 million and an associated 2% bond is in the process of being submitted to the GDPA.

Under the new petroleum law, the initial five-year term of an exploration licence can potentially be extended by application for two additional two-year periods, supported by an additional work program, for a total term of nine years. If a discovery is made on a licence by the end of the nine-year period, the term can be extended for a further two-year appraisal period to a total term of 11 years. Throughout this 11-year period, the Corporation may apply to convert discovery areas to production leases, typically with a 20-year term extendable to 40 years. In a change from the previous petroleum law, up to 100% of the licence area can potentially be converted to a production lease if technically justified, for example if a more pervasive unconventional resource play has been proven by drilling.

Planned Banarli Exploration Drilling
It is expected that an initial exploration well at Banarli would target conventional gas in the Osmancik formation and top of the Mezardere formation to a depth of approximately 2,500 metres. The Corporation has mapped more than 15 exploration structural leads at Banarli based on 92 kilometres of 2D seismic acquired by the Corporation in 2013 and more than 300 kilometres of vintage 2D seismic over the licence. The current 3D seismic program targets these leads and is designed to potentially mature and prioritize these into drill-ready prospects.

The cost to drill, complete and test an initial exploration well at Banarli is estimated at $2.1 million and is included on a contingent basis in the 2015 budget. Additional funds of $1.2 million are also included for a flow line to tie-in the well, contingent on drilling success and the ability to negotiate a transportation and marketing arrangement to tie-in production. Total 2015 capital expenditures at Banarli for the shallow gas play are budgeted at approximately $9.0 million , including $5.0 million for the 3D seismic. The program for Banarli will be firmed up after the 3D seismic interpretation is completed.

Valeura is continuing its process to seek a joint venture partner to participate in funding an exploration drilling program in the deeper horizons at Banarli below approx. 2,500 metres, targeting a potential basin-centered gas play.

With respect to other 100% Valeura exploration licences in the Thrace Basin, the Corporation has submitted an application to the GDPA to relinquish the small Copkoy exploration licence to the west of the core exploration and production area to concentrate its drilling program on higher priority Valeura and joint venture licences and leases. The enlarged Banarli licence area offsets approx. 74% of the area expected to be relinquished in the Copkoy licence.

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Related Categories: Formation Evaluation  General  Geological, Geophysical  Geophysical Contractors  Mud Logging  Reservoir Engineering & Recovery Methods  Seismic survey  Well Completion, Logging, Workover 

Related Articles: Formation Evaluation  General  Geological, Geophysical  Geophysical Contractors  Mud Logging  Reservoir Engineering & Recovery Methods  Seismic survey  Well Completion, Logging, Workover 

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