Regal announced that the drilling of well MEX-103 has commenced within its Mekhediviska-Golotvschinska and Svyrydivske production licences (working interest 100%) in Ukraine. This well is the first new well on the MEX-GOL field since 2004 when Regal drilled well MEX-102. The drilling is being conducted by Chernihivnaftagasgeologia (“CNGG”) under a contract signed in July 2007 and the well, which has a total targeted depth of 5,200 metres, is anticipated to be completed in mid-2008.
This well is the first stage in the full-field development programme for the MEX-GOL and SV fields which contain audited proven and probable reserves estimated at 169 mmboe (RyderScott, 2005). It is anticipated that further drilling will take place in 2008. Currently Regal is preparing sites and applying for permits for the drilling of five further wells – MEX-106, GOL-108, SV-53, SV-56 and SV-58 – which are planned for drilling once additional rigs become available.
The Company presently produces from five wells (MEX-102, MEX-3, GOL-1, GOL-2 and SV-10) which are produced through the Company’s existing gas processing and export facilities. In September 2007, average production was 5.51 mmcf of gas per day and 294 barrels of condensate per day (total equivalent of 1,275 boepd).
On 14 September 2007, the Company announced the signing of an exclusive Memorandum of Understanding (“MOU”) with MND Exploration and Production Limited (“MND”), under the terms of which, MND’s holding company KKCG Oil and Gas BV, is proposing to invest a total of US$330,000,000 in the development of the MEX-GOL and SV fields in return for a 50% working interest in the Ukrainian production assets. Due diligence and the preparation of transaction documentation is continuing and the completion of any transaction remains conditional thereon.
