Sagres announced that the Petroleum Corporation of Jamaica (PCJ) has approved a 9 month extension of the Initial Exploration Period on Sagres' offshore blocks 9, 13, and 14. The Initial Exploration Period, Phase 1 will now end December 15, 2011, by which time Sagres must elect whether to enter Phase 2. Phase 2 of the Initial Exploration Period for each block carries a one well commitment and now must be completed by December 15, 2013.
Under Phase 1 of the Initial Exploration Period, Sagres has conducted bathymetric, geologic, seismic, and environmental surveys of blocks 9, 13, and 14, and regional geologic surveys of the adjacent Walton and Lower Walton basins, and the Island of Jamaica. Sagres has met all the work commitment under Phase 1. On August 27, 2010, Sagres announced the results of an independent evaluation of the resource potential prepared by Chapman Petroleum Engineering Ltd. ("Chapman"); "certain prospects identified in Sagres' blocks 9, 13 and 14 in the shallow-waters (20 meters) of the Pedro Bank 120 kms offshore Jamaica, show a gross mean prospective resource estimate (oil) of 3.0 billion barrels". Chapman is a qualified reserves evaluator and is independent of Sagres, each as determined in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. Sagres holds a 100% interest in each block and is currently seeking a partner to proceed with exploration drilling.
David Johnson, President and CEO of Sagres Energy commented that, "There is renewed interest in exploration in Jamaica, with 9 of 11 previously drilled wells having oil shows, 3 potential source rocks, a new CGG-Veritas multi-client seismic survey revealing greater than 10km of sedimentary fill in a previously unmapped deep-water Lower Walton basin, and a new deep-water lease round currently underway." The newly released blocks in the Lower Walton Basin lie immediately south and adjacent to Sagres' blocks 13 and 14. The deep-water bid round is scheduled to close September 1, 2011. David further commented that, "Jamaica is ready to commercialize its resource potential with refining capacity of 45,000 barrels of oil per day; electricity generators that accept gas, oil, or biodiesel fuels; established bauxite, shipping, and cement industries; and a geographic position central to the major global marine trade routes."
The resource estimates above are for prospective resources, which are defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
Sagres is continuing to pursue joint venture partners to further explore and develop its interests in the blocks. Several international energy companies have signed confidentiality agreements with Sagres in order to access the data for the blocks, and evaluate the potential for a joint venture. Sagres does not currently expect to incur any material expenditures in respect of the blocks in 2011.
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