The Barlad Concession, in which Regal holds a 100% interest, is a large exploration, development and production block in the northeast of Romania covering an area of 6285 square kilometers.
During the summer of 2006, Regal undertook a 2D seismic program totaling 803 kilometers over the Concession, with 487 kilometers being acquired in the largely unexplored north of the Concession and a further 316 kilometers being acquired in the south of the Concession mainly over the Barlad Depression. The final cost of this seismic program was approximately $5 million.
Interpretation of the recently acquired 2D seismic data (803 km), together with 200 km of 2D seismic data previously acquired by Regal in 2005 and 800 km of re-processed 2D seismic acquired in the 1980s and 1990s as well as available well control, has now been completed by PGS Reservoir Limited.
Over 10 prospects and leads have been currently identified in the prospective Sarmatian, Eocene and pre-Miocene formations, which are productive in a number of adjacent oil and gas fields in both Romania and Moldavia, including the large Roman Gas Field which lies 10 km to the west of the northern part of the Concession.
Initial studies, including hydrocarbon volume estimation, have been performed by Regal on these prospects and leads, which has identified a low risk (29%) drillable prospect in the Sarmation formation with an unrisked undiscovered gas-initially-in-place volume ranging from 60 to 235 bcf (approximately 10 to 40 mmbbls oe), with a best estimate of 75 bcf (approximately 12 mmbbls oe). At least one of the remaining Sarmatian leads is expected to be matured for drilling.
Further studies are continuing on the Eocene and pre-Miocene formations where further leads have been identified, particularly in the deeper formations in the Barlad Depression to the south of the Concession, which are considered to hold additional exploration potential for both gas and oil.
The Company is in negotiations with drilling contractors in Romania to contract a rig for the drilling of identified prospects, and drilling operations for at least 2 wells are planned to commence in Q2 of 2007.
The Concession, which was ratified in January 2005, has a potential term of 30 years of which the first 5 years are scheduled for exploration, in 2 phases. The first 3 year exploration phase requires the acquisition of 1000 km of 2D seismic, field geochemistry studies and the drilling of 2 wells. The seismic and study commitments have now been completed and the total expenditure by Regal to date on the Concession is approximately $7 million.
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