Cronus #1 Exploration Well
In a recent news release, Pioneer, the operator of the Cronus #1 well announced the following well results:
"The Cronus #1 well (90% WI) was planned to test multiple objectives on a prospect just west of the Meltwater field. A Torok sequence similar to those productive at Meltwater was the primary objective of the well. A thick, oil-bearing sand section in the Torok and a thin, oil-bearing sand in the Jurassic-aged Kuparuk C were penetrated by the well. Wireline and core data are currently being analyzed and integrated with 3-D seismic to determine if appraisal activities are warranted during the 2006 - 2007 winter drilling season."
These well results have particular significance to the BRPC / AVCG - TG World JV. Certain of the leases held for the benefit of the JV are located approximately 2 - 3 kms from the Cronus #1 discovery well and are on trend geologically. This well has confirmed the presence of oil-bearing Cretaceous Torok and Jurassic Kuparuk C sand lobes in the area. The JV has an interest in 12,348 gross acres in Cronus prospect leases, the nearest of which is located approximately 3 kms to the north of the Cronus #1 well, an additional 24,840 gross acres in leases on the Itkillik River prospect, the nearest of which is located approximately 2 kms to the south and southwest of the Cronus #1 well and a number of other leases covering exploration prospects close to and surrounding the Cronus prospect. In addition to the leases on the Cronus prospect and on the Itkillik River prospect, the JV has an interest in 31,696 gross acres on the Ocean Point prospect, 24,840 gross acres on the Titania prospect and 30,651 gross acres at the Whiskey Gulch prospect, all on the Alaska Central North Slope. All of the prospects are multiple play exploration types, are prospective for oil and are located near existing infrastructure with possible fast-track development potential for near term first oil production.
All JV prospects near the Cronus #1 well are located along the highly prospective Central North Slope Fairway where well in excess of 1 billion bbls of oil reserves have already been discovered and where substantial oil production activities occur. Significant oil fields include the Alpine (490 mmboe), Nanuk (60 mmboe), Tarn (90 mmboe), Meltwater (50 mmboe) and Kuparuk River (2.5 bboe) fields.
Pioneer has also reported that a well on its Antigua Prospect has been drilled. This location is adjacent to the Kuparuk River field and adjacent to the JV's Whiskey Gulch prospect leases. This well is expected to test the JV Whiskey Gulch Kuparuk play concept.
Commenting on the Cronus #1 well results, Clifford M. James, President and CEO of TG World noted that, "Management of TG World is encouraged by the news that the Cronus #1 exploration well - just 2 to 3 kilometres from certain JV prospect leases - encountered "a thick, oil bearing sand section". This is potentially promising news for the JV. This further increases the areal extent of known oil charge in the emerging Beaufortian and Brookian fairways in this area, and proves oil presence in nearby proximity to the multiple prospects covered by JV leases. Along with AVCG, TG World eagerly awaits Pioneer's core & wireline analysis-based decision whether or not to drill a delineation appraisal well in the Cronus area during the 2006-2007 winter drilling season."
Mr. James also commented: "TG World's working interest position of 25-35% in the various Central North Slope play areas, together with its "drilling electives", provides TG World with a prudent risk management approach, which is intended to balance its existing Niger "frontier" play and should accelerate its opportunity to achieve first oil production. It's an exciting time for TG World shareholders with drilling to commence on up to six potentially high impact exploration wells in two different regions. "
Ambitious Joint Venture Work Program Planned for Balance of 2006 and Winter Drilling Season 2006-7
The JV work program planned for the balance of 2006 and for the 2006-7 winter drilling season contemplates further analysis of the various JV prospects on the Alaska Central North Slope, with a view to identifying a short list of drillable prospects for the coming three winter operating seasons. The work program for the balance of 2006 and for the 2006-7 winter drilling season is expected to include 3D seismic data purchases, further lease acquisitions, possible farm-ins and the drilling of up to three wells. TG World estimates its share of the costs of this proposed exploration program to be in the range of US $7 to $10 million. Financing for this program will come from current working capital, anticipated receipts from option exercise and new funds to be raised from capital markets. TG World has the right to participate, or not to participate, in each part of the planned programs. If the Company decides not to participate in any portion, it will lose its property interest in the lands subject to that part of the program only.
TG World has not independently verified the disclosure concerning Pioneer's Alaska prospects set out in its recent news release.
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