Kulczyk Oil announced that Loon Latakia Limited ("Loon Latakia"), an indirect wholly-owned subsidiary of KOV, has suspended current operations in Syria. As a result of KOV suspending its exploration activities in Syria, the drilling of the Itheria-1 well, the first exploration well being drilled by the Company and its joint venture partners on Syria Block 9, has been suspended at a depth of 2,072 meters.
The original planned target depth of the Itheria-1 well was 3,256 meters. The well was designed to evaluate multiple zones within a large structure with four-way dip closure defined by 3D seismic in an area approximately 200 kilometers due east of the City of Latakia. The Affendi Sandstone of Ordovician age, the first objective encountered, was penetrated at a depth of approximately 1,470 meters and did not have sufficient porosity or permeability to be a potential reservoir. Two other potential reservoirs, the Ordovician Khanasser Sandstone and the Middle Cambrian Burj Carbonate are expected to occur below the suspended depth. The geological and petrophysical information obtained thus far at Itheria will now be assessed to review the prospectivity of the deeper objectives in Itheria and in the nearby Bashaer prospect. The need to assess, together with an increasingly more difficult operating environment, has resulted in a suspension of exploration activity.
As a result of the current operating conditions in the country, KOV requested an extension of the first exploration period under the Block 9 Production Sharing Contract ("Block 9 PSC") which was refused. The Block 9 PSC remains in effect and discussions with the Syrian government authorities concerning Block 9 are continuing. In the meantime, KOV will continue to monitor operating conditions in Syria to assess when, and if, a recommencement of its Syrian operations is possible.
Loon Latakia holds a participating interest of 50% in the Block 9 PSC which provides the right to explore for and, upon fulfilment of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometer (2.48 million acre) area in northwest Syria.
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