Mediterranean Oil & Gas on Friday announced the results of an independent evaluation of Malta Offshore Area 4 (Area 4) currently owned 100 percent by MOG through its wholly owned subsidiary, Phoenicia Energy Company Limited (PECL). PECL entered into a farm-out agreement with Genel Energy Plc in August 2012 to sell 75 percent of PECL's interest in Area 4. This farm out is conditional on approval by the Maltese authorities, together with the grant of a minimum one year extension of the first exploration period of the Area 4 Production Sharing Contract.
Following the acquisition of 390 square miles (1,012 square kilometers) of long offset 3D seismic data on Block 7 of Area 4, ERC Equipoise Ltd (ERCE) has carried out an independent review of the undiscovered hydrocarbons initially in place, Prospective Resources and the geological chance of success associated with Area 4. The review was carried out using the March 2007 SPE/WPC Petroleum Resources Management System (PRMS) as the standard for classification and reporting. ERCE is an independent consultancy specialising in geoscience evaluation, engineering and economic assessments.
The ERCE evaluation of the identified traps highlights four structures at Eocene/Palaeocene level that exhibit sufficient technical maturity to confirm Prospect status under the PRMS. ERCE has carried out an independent estimation of Prospective Resources and geological chance of success (COS) for these Prospects, which MOG has named: Hagar Qim, Tarxien, Skorba and Dalam. The reservoir analogue used is that of the Tunisian El Garia Formation. Based on seismic mapping character, an alternative, higher risk, 'reef' model is also proposed for the Tarxien Prospect. ERCE has also estimated Prospective Resources and COS for this potential outcome.
ERCE estimates that the mean unrisked Prospective Resources for the four Eocene/Paleocene Prospects is 260 million stock barrels (MMstb), with an additional upside of 27 MMstb in the case that the Tarxien Prospect proves to be a 'reef' model.
Additional structures, identified by MOG at Eocene/Palaeocene level and towards the top of the Cretaceous, are classified by ERCE under the PRMS as Leads, as they are currently either high risk, or warrant further technical work in order to mature to Prospect status. While these Leads have not been audited by ERCE, they are assessed by MOG to contain an additional 1 billion boe of Prospective Resources, thus the aggregate Prospective Resources identified in in the entire Area 4 (Block 4, 5, 6 & 7) remains broadly in line with previous estimates.
In addition, analysis to define the prospectivity of a potentially new deeper Jurassic (or older) Play, that the new 2011 3D seismic data have highlighted, has commenced, but as yet no Leads or Prospects have been matured. However, this Play can be considered as significant potential upside.
Dr. Bill Higgs, chief executive of Mediterranean Oil and Gas, commented: "Importantly, this independent review of the Area 4 Prospects by ERC Equipoise confirms the technical evaluation of the exploration potential carried out by the Company. Moreover, a detailed economic evaluation confirms that, if proven by drilling, the Prospects identified at the Eocene/Palaeocene can be economically viable on a stand-alone basis. We look forward to testing the first of these Prospects with the drill bit by the end of 2013, pending completion of the farm-out agreement with Genel Energy announced in August.
"We are continuing to work on maturing additional Leads and Plays that could provide considerable upside potential should an active hydrocarbon system be demonstrated by the initial wells."
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