TG World Energy Outlines Drilling Program for Tenere Concession
TG World Energy's subsidiary, TG World Petroleum Limited, and the operator of the Tenere Block, CNPC International (Tenere) Ltd. ("CNPCIT"), have approved the drilling of two exploration wells in 2006 on the 17.3 million acre Tenere Block, Niger. Drilling is expected to commence as soon as equipment can physically be mobilized to the central African country and drill sites prepared. (CNPCIT is a unit of the China National Petroleum Corporation.)
TGWPL and CNPCIT approved locations for the two initial wells at an Operating Committee Meeting held in Beijing on December 16, 2005. The target depths of the two wells are 4,035 meters and 3,671 meters, respectively, and the initial well is expected to spud in the May to July period 2006, depending on the arrival of equipment. TGWPL and CNPCIT anticipate that drilling operations will continue through to the end of the 2006 calendar year.
In addition to the drilling of the two exploration wells, TGWPL and CNPCIT have authorized an expansion of the 2006 Tenere program to include the acquisition of 1,000 km of additional new 2D seismic, and a series of additional geological and geophysical studies. Provision has also been made, on a conditional basis, for up to 150 sq km of additional 3D seismic data in the event of a discovery.
Reflecting the expanded elements of the program, TGWPL and CNPCIT have approved a preliminary budget for the 2006 exploration program of approximately US $44 million.
These expenditures will be incremental to the approximately US $26 million budgeted / expended in 2005 (continuing into early 2006) which includes: (i) the acquisition, processing and interpretation of a total of 2,569 km of 2D seismic data; (ii) the reprocessing of 3,822 kms of older seismic data on the Tenere Block; and (iii) several geological studies carried out in 2005. Approximately 500 km of the second tranche of 881 kms of 2D seismic remains to be acquired. The acquisition crew is currently acquiring that additional data in a previously unexplored area at the southern end of the Tenere Block, where it moved after shooting a number of infill lines that were acquired to assist in the selection of the two 2006 drilling targets. (The acquisition of 1,000 km of new 2D seismic planned for 2006 is in addition to the 881 kms currently being acquired.)
The two planned exploration wells will target the T-10 and T-1 Prospects in the West Fachi Graben, located in two of five separate play fairways identified by seismic data collected earlier in 2005. The locations have been chosen to optimize multiple reservoir plays in the wells, and will test deeper, secondary and tertiary targets as well as primary targets at shallower depths. The uppermost primary target zone is the zone that has tested hydrocarbons on the adjacent Agadem Block to the south where Esso and Petronas have announced seven new pool discoveries totalling in excess of 350 million barrels of equivalent oil.
TG World has been advised that a drilling rig capable of drilling to 5,000 meters has been sourced by CNPCIT from Great Wall Drilling Corporation, a CNPC affiliate, and is currently being mobilized to the port of Tanjin, China for shipping at the end of January to Cotonou, Benin. From there, the drilling rig will be transported overland to Niger. CNPCIT has confirmed that it is also mobilizing casing and all other drilling materials for shipping from China. TG World has been advised that specialized desert operations equipment is being sourced, and in some cases new equipment is being manufactured specially, for the Tenere program.
"The T1 and T10 prospects are big structures located close to the hydrocarbon kitchen, the expected source of hydrocarbons. Management of TG World is of the view that the initial drilling locations selected are exciting targets," said TG World's CEO, Clifford M. James. "As well, we think the fact that our Chinese partners have repeatedly expanded the scope of the program confirms our own positive view of the prospectivity of the Tenere Block."
"The new seismic data has confirmed further evidence of the existence of many of the previously mapped structures, and added new ones," Mr. James noted. "We are optimistic that there will be a lot of targets to drill on the Tenere Block."
The additional seismic data being acquired and information generated from the drilling and testing of first two wells, are expected to be of assistance in determining the location of the third exploration well contemplated by the Minimum Work Program for the Tenere Block. The third exploration well is expected to be drilled in early 2007 and existing agreements provide for TGWPL to be carried for the costs of drilling of that well.
With the expenditures already made to date, the costs associated with the preliminary 2006 program, the costs to acquire additional seismic data and the costs of drilling of the third exploration well, the total cost of the Minimum Work Program is expected to increase from the 2004 estimate of US $55 million to an estimated US $ 90 million. TGWPL will be required to pay its 20% share of any seismic acquisition programs undertaken after the drilling of the two initial exploration wells.
The minimum work program for the Tenere Block consists of the acquisition, processing and interpretation of 1,500 km of seismic data and the drilling of three exploration wells. The operator of the Tenere Block, CNPCIT, holds an 80% interest in the Tenere Permit; TG World holds a 20% carried interest.
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