Serinus Energy Inc. (Serinus, SEN or the Company), an upstream oil and gas exploration and production company, reported that the exploratory well on its Lukut Updip 1 prospect on Brunei Block L is drilling ahead in 6 inch hole at 6,168 feet (1,880 meters) measured depth (MD) after having set 7 ich liner at 5,630 feet (1,716 meters) MD. The well encountered formation pressures significantly higher than predicted which necessitated the setting of the 7 inch liner earlier than planned.
Prior to setting the 7 inch liner, the well intersected an 8.2 feet (2.5 meter) sand at 5,653 feet (1,723 meters) MD which is believed to be hydrocarbon bearing based upon the logging while drilling gamma ray/resistivity profile and a positive oil show in drill cuttings. Further decision on evaluation of this zone will be undertaken following drilling of the current hole section, which is targeting several deeper seismically defined anomalies.
As a result of encountering hard formation in the 13.375 inch hole section, and the higher pressures in the 8 inch hole section, the well is currently some 40 days behind schedule. The Block L Production Sharing Agreement (PSA) between the Brunei National Petroleum Company (PetroleumBRUNEI) and the Block L Parties was signed on Aug. 28, 2006, and expires on Aug. 27, 2013. The Company’s position is that as long as we are engaged in an active drilling program, the Phase 2 of the Exploration Period of the PSA is automatically extended. Serinus has requested a formal written extension to Phase 2 from PetroleumBRUNEI to allow for completion of the drilling program currently underway, including the drilling of Lukut Updip-1 and the drilling of the second exploration well (Luba-1) in the Phase 2 drilling program. The response from PetroleumBRUNEI to the extension request is expected imminently. Drilling operations are continuing in accordance with the terms and conditions of the PSA. In the event of a discovery, provisions within the PSA allow the Block L parties to continue with further appraisal and development provided the Block L Consortium satisfies any prior obligations as required by the Block L PSA.
Serinus has a 90 percent interest in the Block L with indirect wholly-owned subsidiary Kulczyk Oil Brunei Limited having a 40 percent interest and indirect wholly-owned subsidiary AED SEA (operator) having a 50 percent interest. The remaining 10 percent interest is owned by a private Brunei company at arm’s length to Serinus.
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