According to the agreement, Groundstar will pay 40% of the cost of the initial three year exploration work program to a maximum of USD 9 million (USD 3.6 million net to Groundstar). The minimum work commitments of the initial phase include the drilling of three wells.
The WEEM block covers 1,328 square kilometers (approximately 330,000 acres) and lies in the southern portion of the Gulf of Suez/Eastern Desert petroleum province. Five producing oilfields are located on the adjacent southeastern block, operated by Lukoil Overseas Holdings Ltd. The Original Oil In Place (OOIP) estimates for these five fields are 195 million barrels. Current production is approximately 12,000 BOPD and is predominately from two oilfields; Rabeh and Rabeh East, which are located 5 kilometers southeast of the WEEM block. Oil and gas pipelines with 28,000 BOPD in excess capacity, pass within a few kilometers of the block boundary.
An extensive database of 3D and 2D seismic data exists on the block. Numerous prospects and leads have already been seismically mapped in the highly prospective southeast portion of the block. The preliminary work program is to drill three of the highest potential prospects within the initial exploration period.
Kam Fard, Groundstar's president and CEO, states: "The acquisition of a working interest in the Gulf of Suez WEEM block represents a significant milestone for Groundstar in that we will be drilling high potential prospects in the near future. We believe this farm-in is a low risk, high reward opportunity that will benefit the long term future of the company."
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