Under terms of the new multi-phase agreement, Anadarko has committed to acquire, process and interpret a transition-zone 3-D seismic program covering a 420-square-kilometer shallow-water area. Upon completion of the estimated $12 million seismic program, Anadarko will have the option to drill two exploration wells and conduct additional seismic work. At the conclusion of this multi-phase work program and upon Anadarko's reimbursement of up to $4.5 million of past costs, Eurogas would own an 11.25 percent working interest in the farmout area, APEX would have a 13.75 percent working interest, and Anadarko would own a 75 percent working interest and serve as operator for any new discoveries. The work program is scheduled to occur over a 3 1/2-year period.
Eurogas is pleased to be working with Anadarko as the company has a history of exploration success in the region and intends to bring its expertise to bear in evaluating the high potential of the Reineche, El Garia and Bireno hydrocarbon fairways running through the Sfax Offshore Permit by beginning the seismic acquisition program in mid-2006.
Specifically excluded from the Agreement are three areas covering a total of 50,400 acres surrounding three prior oil discoveries (Ras El Besh, Jawhara and Salloum) that are deemed by Eurogas and its operating partner to be commercially highly prospective. They will jointly retain a 100% working interest. Eurogas and APEX will continue to focus on evaluation of the retained areas, recognizing that they are of lower risk as each contains a prior discovery that tested oil from an accumulation in either the El Garia or Bireno formations.
Eurogas and APEX continue their plans to drill a well on the 1997 Ras El Besh discovery. The REB 2 well, drilled by a previous operator, tested oil from the El Garia carbonate formation. Based on interpretation of the 2004 three dimensional seismic survey acquired by the two partners, the REB 3 well will test the crest of the Ras el Besh structure in a location that is anticipated to have up to 40 meters of pay. The REB 3 well is planned to be drilled in the later part of 2006, pending rig availability.
The Sfax permit is located on a hydrocarbon fairway that trends from offshore Libya, through the Gulf of Gabes, to onshore Tunisia and is surrounded by producing fields to the west, north and east that hold reserves estimated in excess of 1 billion barrels of oil equivalent.
Eurogas Corporation is an independent oil and gas exploration company listed on the TSX Venture Exchange under the symbol EUG and is engaged in exploration and development activities in Spain and Tunisia.
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