"This extension was essential to obtain prior to our application for a Development Contract on the South Alibek Field," commented Bruce Falkenstein, VP Exploration. "We have a license of more than 14,000 acres and have proved reserves covering less than 2,000 acres of the total available area. There still remains more than 12,000 acres which are highly prospective but mostly undrilled. Most of this area has been estimated by Ryder Scott Company to contain significant potential reserves. Rather than relinquish most of this acreage next year, it was key for us to secure this extension of the exploration rights to allow us to continue the drilling and delineation in the unproven area of the license," added Mr. Falkenstein.
The existing exploration period was set to expire in April 2005 and is now extended for an additional two years until April 2007. A work program of $30.5 million has been detailed which consist of $21 million for drilling and completing 5 wells and $9.5 million for facilities enhancements, pipeline and transfer station, seismic, geological and field development studies and other field infrastructure.
The company expects to finance its share of these costs with cash flows from the main South Alibek Field over the next two years.
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