Primeline Secures Contract Extension for Block 33/07 in East China Sea

Primeline Energy Holdings Inc. (Primeline or the Company) disclosed Tuesday that China National Offshore Oil Corp. (CNOOC) has agreed to extend the exploration period under the Petroleum Contract for Block 33/07 (Petroleum Contract) in East China Sea to facilitate Primeline’s exploration drilling program.

On Oct. 9, CNOOC and Primeline signed an amendment agreement relating to the Petroleum Contract to extend phase one of the exploration period from three years to 3.5 years so that it now expires April 30, 2016. The Petroleum Contract originally had a seven year exploration period split into three phases of three, two and two years. The amendment agreement extends the exploration period to 7.5 years with the first phase extended to 3.5 years, with the other phases remaining at two years each.

In the first exploration period, the minimum work program comprises 232 square miles (600 square kilometers) of 3D seismic and two exploration wells. Primeline fulfilled the seismic commitment in 2014 and is currently drilling exploration well LS23-1-1 and expects to reach target depth by the end of this month. The extension of the exploration period was agreed in order to provide sufficient time to complete the current exploration well and review the results and then complete a second exploration well before the end of the first exploration phase in compliance with the agreed work plan. At the end of each of the first and second exploration phases, Primeline has the right to either enter into the next phase or terminate the exploration contract. The minimum work program for each of the second and third phases is one exploration well.

As previously announced, the drilling of LS23-1-1 well commenced on Sept. 23 and is now proceeding well. Primeline’s drilling contractor China Oilfield Services Ltd. (COSL) has completed the drilling of 17.5 inch hole to 4,350 feet (1,326 meters) rotary table (RT), set the 13.375 inch casing and plans to start drilling the 12.25 inch section Oct. 13. The well is targeting several reservoir zones in this section of the well before it reaches the designed target depth of 8,819 feet (2,688 meters).


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