Primeline Energy Holdings Inc. announced that its wholly owned subsidiary, Primeline Energy Operations International Ltd. has entered into a turnkey contract for a 232 square miles (600 square kilometers) 3D seismic survey as part of its rolling development and exploration program. A brokered private placement is proposed to fund the Company's share of the cost of the Survey.
PEOIL has entered into an agreement dated Dec. 13 with China Oilfield Services Ltd. under which COSL agreed to carry out the acquisition and processing of data for the Survey on a turnkey basis for Primeline.
Under the Turnkey Contract, COSL will complete the acquisition of 3D seismic data over 232 square miles (600 square kilometers) in Block 33/07 using 3D seismic survey vessel, Hai Yang Shiyan 718. The Survey will commence once the vessel is released from its annual maintenance, which is expected to be sometime around the end of January 2014. The Survey is expected to be completed by mid-April 2014. Following completion of the Survey, COSL will also be responsible for processing the data acquired. COSL will supply all necessary equipment, services and personnel for the Survey.
Primeline has existing 3D seismic data covering the LS 36-1 gas field development and its surrounding prospects. The area to be surveyed is located to the north of and adjacent to this existing 3D seismic data area. The Survey is intended to provide better definition of the prospect leads that have been identified in the survey area using 2D data in order to generate more drillable prospects. Completion of the Survey will satisfy part of Primeline's work commitment under Petroleum Contract 33/07, which requires a 232 square miles (600 square kilometers) seismic survey and two exploration wells in the first Exploration phase, which ends on Oct. 31, 2015.
Based on the Turnkey Contract, the cost of the Survey is expected to be approximately $7.6 million and the cost of processing the data is expected to be $580,000. The cost of the Survey will be borne by Primeline and Primeline Petroleum Corporation, a company 100 percent owned by Primeline's Chairman and majority shareholder Victor Hwang, in the proportions 75/25, representing their respective interests in Petroleum Contract 33/07. Accordingly, the net cost to Primeline is expected to be $5.7 million for the Survey and $435,000 for the data processing.
Prior to its execution, Primeline obtained confirmation from Hwang that he would underwrite the cost of the Survey in order to enable Primeline to enter into the Turnkey Contract. Primeline is planning to raise the funds required for its share of the costs of the Survey pursuant to the private placement referred to below.
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