GeoGlobal Takes Stake in Tarapur Block in India
GeoGlobal Resources has acquired a 20% participating interest from Gujarat State Petroleum Corporation ("GSPC"), in the onshore CB-ON/2 Exploration Block ("Tarapur Block").
The Tarapur Block covers an area of approximately 1,211 square kilometers and is located in the centre of the Cambay Basin in the State of Gujarat near the Company's Mehsana Block (285 square kilometers) and the Company's Sanand and Mirola Block (125 square kilometers). GSPC is the operator of the Tarapur Block and owns the remaining 80% participating interest. Oil and Natural Gas Corporation Limited of India has the right to participate into the development of any commercial discovery by acquiring a 30% participating interest as provided under the PSC. This exercise of this right would result in the reduction of the Company's participating interest to 14%.
Mr. Jean Paul Roy, President and CEO of GeoGlobal stated "we are very excited about our opportunity to acquire this interest in partnership with GSPC in the Cambay Basin."
The Tarapur Block is currently nearing the end of the second phase of the work commitment pursuant to the Production Sharing Contract ("PSC") entered into on April 12, 2000. GSPC recently drilled the Tarapur #1 well to a depth of 2,250 meters to the top of the Deccan trap. This well has been logged and cased and is currently being tested and evaluated. A workover on the Changara #1 well has also been conducted and results are pending testing and evaluation. The results to date are considered by management to be preliminary and have reached no conclusion as to what, if any, reserves can be declared. Final testing and evaluation of both wells is expected to be completed by mid May
Phase two under the PSC for the exploration block will expire on May 22, 2005 and GSPC anticipates entering into the third and final phase after relinquishing, as required under the terms of the PSC, 25% (approximately 405 square kilometers) of the Tarapur Block back to the Government of India. Phase three has a term of 2 1/2 years and the work commitment is to drill one well to a depth of 3,000 meters or to the Deccan trap.
GeoGlobal entered into a Memorandum of Understanding with GSPC on October 5, 2004 to acquire the 20% participating interest in the Tarapur Block subject to certain terms and conditions which have been met and approved by both company's Board of Directors. Certain of these terms and conditions include payment by the Company for its 20% participating interest in all back costs incurred to date under the PSC which amount to approximately Rs. 2.53 Crore (US$579,523). These back costs include the re-processing and interpretation of approximately 750 linear kilometers of 2-D seismic, the acquisition of an approximate 42 square kilometers of 3-D seismic, the workover on the Changara #1 well and the drilling of the Tarapur #1 well. As the holder of a participating interest, the Company will be required to fund its 20% share of all further exploration and development costs incurred on the exploration block.
The Company has further agreed to provide necessary geological and geophysical assistance at no cost to GSPC toward fulfillment of the work commitment made under the PSC in carrying out the exploration activities.
Mr. Jean Roy further stated "modern 3-D seismic technology is
required to image the deep targets on the block. Post drilling
enhanced recovery methods will also be required to liberate the light
45 degree API crude tested on the block."
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