JKX provided a status update of exploration, development and production activities in Hungary.
Production - Hernad Licenses (JKX 50%)
Following the successful workover of the Hn-2 well and recompletion of the Gh-1 well in the fourth quarter of 2010, current gross production is approximately 7 MMcfd of gas and 180 bcpd. The field operator, Hungarian Horizon Energy (HHE), and JKX are planning a 20% increase in production in the second quarter of the year. The local gas market remains strong with 2011 realizations to date in excess of $10 /Mcf.
Farm-in to Turkeve Acreage (JKX 50%)
JKX has entered into an agreement with HHE to farm-in to the drilling of up to seven exploration wells located in the Turkeve area of north east Hungary. Under the terms of the agreement, JKX funds 66.67% of drilling and completion costs to earn 50% of future mining plots formed to develop discoveries, and also funds 75% of pipeline connection costs. Costs for a completed well are estimated at $3m gross.
Exploration - Hernad License (JKX 50%)
The Tiszavasvari-6 well was drilled in the second quarter of 2010 and tested during January 2011. The well encountered a 300m gross reservoir interval with excellent gas shows in the deeper secondary target below 2,580m. Three reservoir intervals were tested with a maximum rate of 1.5 MMcfd being recorded. The well has been suspended in anticipation of a possible reservoir stimulation program. A larger tilted fault block structure with amplitude supported Lower Pannonian reservoir intervals lies updip from the first structure and is estimated to contain an initial gas in place of between 50 and 150 BCF. Appraisal drilling is anticipated in the second quarter of 2011.
Additional amplitude supported exploration targets in Upper Pannonian shallow water sands have been identified to the north-east of the Hajdunanas Gas Facility. Permitting is underway for a test of a three way dip and fault closed structure with a TD of approximately 800m. Numerous low risk but small additional prospects would be de-risked by a successful well.
The Tiszatarjan-1 exploration well, approximately 12 km from the Hadjunanas field, remains suspended as an oil discovery, pending a forward program of formation stimulation.
Exploration - Veszto License (JKX 25%)
JKX and HHE continue the evaluation of the extended test results from the Nyekpuszta -2 well. This potentially very large (>200BCF) structure will require additional appraisal drilling and formation stimulation. A further well is planned for the third quarter of 2011.
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