Under the terms of the Agreement, DualEx will reimburse some of the historical exploration costs and fund 75% of the costs of drilling two wells, to earn a 37.5% working interest in 45% of the area of the Exploration Permits. DualEx also has the option to participate in two further wells to earn a 37.5% working interest across the whole of the two permits.
The first well, Peneszlek-104 (PEN-104) is a re-appraisal well for the Peneszlek field and has a secondary target in Pannonian sandstone formations. The second well, Fehergymat-1 (FGY-1), targets a gas prospect also in the Pannonian formations. The FGY-1 well with a planned depth of 1,100m is to be drilled immediately after the PEN-104 well, scheduled to commence drilling in September to a depth of 1,350m.
The Peneszlek field produced a total of 4.8 Bcf of gas from 1983 to1989 from six wells. The gas reservoir is in Miocene tuff sediments. Following re-mapping using the seismic data acquired in 2005 by PetroHungaria, it is anticipated that the remaining reserves of this field are substantially more than previously estimated and redevelopment studies are on-going. During the 1980's two satellites of the Peneszlek field were discovered and tested gas but were not put on production at that time.
The first optional well is planned as an appraisal of one of these Peneszlek satellite discoveries; the second optional well targets a seismically defined (AVO) prospect in the Pannonian sandstones in the south of the permits.
Ascent has also received a Letter of Intent from a Swedish Company PetroPequnia AB which seeks to enter in to an agreement under the same terms to farm-in for a 5% working interest by funding a further 10% of the cost of the drilling.
Besides these operations in Hungary, Ascent has four other wells planned for Italy and Spain. Despite delays caused both by permitting and the shortage of equipment and services, the Company has, through its Italian subsidiary, contracted a rig to drill the Anagni-1 and Arrone-1 wells in the Frosinone permit of the Latina Valley and the Fiume Arrone Permit near Rome's Fiumicino airport. Following the drilling of these two wells it is planned to move the same rig to Spain for the drilling of the Hontomin 4 appraisal well. Subject to receiving final authorization, the rig is expected on location to commence drilling the Anagni-1 well in October 2006. The Tozo-1 re-entry will use another rig which is currently working on wells in the Ayoluengo oilfield in Spain.
Ascent Managing Director Jeremy Eng said: "The farm-out agreement in Hungary allows us to fast-track the exploration and development of the Nyirseg Permits and Peneszlek gasfield. DualEx is a great partner for PetroHungaria bringing invaluable experience and a Canadian operating philosophy to the project. The Hungarian farm-out generated considerable interest and served as a peer group review to validate our seismic interpretation and geological model.
"I am also very pleased that we have the possibility of an additional two wells to be added to our six well drilling campaign, and that two rigs are now available to us to start drilling next month."
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