Eureka has acquired farm-in rights to earn a 20% interest together with an option to increase its interest to 45%, in two adjoining exploration licenses covering about 500 square kilometers in Southeast Turkey. The Koyunlu-1 well is the first of two farm-in wells to be drilled in the licenses.
The licenses are owned by Arar Oil and Gas Inc, a Turkish exploration and production company with a drilling and oilfield operations arm. Arar has offices in Ankara Turkey and in Houston Texas. Arar is the operator of the well and is also the drilling contractor under a turnkey (fixed cost) drilling contract with Eureka. Arar has extensive experience in drilling and completion of oil wells in the Southeast Turkey region.
The Koyunlu-1 well is located approximately 17 kilometers south of the West Raman oil field (original oil in place 1.5 billion barrels) in the major oil producing region of Southeast Turkey.
The Koyunlu-1 was located to test the eastern portion of a structure with similarities to the West Raman and Raman field structures. The target reservoirs are Cretaceous age carbonates of the Garzan Formation and the underlying carbonates of the Mardin Group. These are the same reservoirs that host oil in the nearby Raman fields and numerous other oil fields in the region.
The oil recovered from the Garzan Formation in the Raman fields is relatively heavy (13-18 API gravity) and the oil recovered so far from Koyunlu-1 is similar. This oil is readily saleable at a small discount to standard Middle Eastern Crude prices.
The structure has the potential to host recoverable reserves of between 2 million barrels and 204 million barrels (31 million barrels P50). The wide range in reserve potential reflects the relatively poor seismic control of the host structure.
The Turkish Petroleum Law was changed on the 18 January 2007 and, among other things reduced the Turkish Government royalty on petroleum production to 1.7% on the first 1000BOPD. Turkish company tax is 20%.
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