JKX will earn a 25% interest in the permits by funding the 200km 2D seismic program required to firm up drilling locations in both permits. JKX has the option to earn a further 25% interest by electing to participate in the first exploration well drilled on either permit, and funding the first US$1 million of the cost of the drilling program; if the option is exercised, JKX will take over as operator of both permits.
It is anticipated that the seismic will be acquired in the second quarter of 2005. Expenditure by JKX on both permits during 2005 is estimated at US$1.2 million.
A large prospect has been identified in the B Golitza permit with the potential to contain several hundred Bcf of gas; the primary targets are Triassic carbonates and sandstones at a depth of 4,000m. A smaller prospect has been identified in B1 Golitza, which could contain approximately 50 Bcf of gas in the shallow Tertiary formations at a depth of less than 2,000m.
The permits are currently held 100% by Balkan Explorers Bulgaria Limited, a wholly owned subsidiary of Falcon Oil and Gas Limited, who will retain the balance of the interest in these permits.
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