On 17th January 2007, the Koyustu-1 gas exploration well, in the Edirne License, Thrace Basin, Turkey flowed gas at rates up to 2 million cubic feet of gas per day from one of three intervals totaling about 17.5m.
The rig was moved about 1.5km south-west to Bati Umur-1 for flow testing of that well. On 17 January 2007, the operator perforated the main gas pay interval 365-370 m to conduct various flow tests on different chokes and on 18 January, Bati Umur-1 was flowing at rate of 3.6 million cubic feet of gas per day on a 36/64 inch choke with 266 psi wellhead flowing pressure for 6 hours.
After the completion of testing at the Bati Umur-1 well, it was the intention of the Operator to move the rig to the Umur-1 location. Umur-1 was drilled in 1986 and may have "bypassed" gas potential in the same sand interval (but 50% thicker in Umur-1) successfully tested by Bati Umur-1. Umur-1 is located within the same structural closure as Bati Umur-1 and if successfully re-entered and tested, could be used as another production well. Due to the unavailability in time of some critical equipment, the test was postponed to a later date to coincide with the drilling of the next exploration well Yagci-1.
The Joint Venture has agreed the parameters of a feasibility study to commercialize the Koyustu and Bati Umur gas fields in the shortest possible time frame. The study will include an independent reserve assessment, confirm sustainable flow rates, recommend a selection of the three potential gas markets already identified and the likely obtainable gas price. The current gazetted gas price is over US$8.50 per thousand cubic feet (US$8.50/mcf).
The Joint Venture has received an Expression of Interest to purchase gas from the Koyustu and any other gas fields in the Edirne License from Zorlu Petrogas. Zorlu Petrogas has been awarded the City Gas Distribution Rights for the Edirne and Kirklareli Provinces from the Turkish authorities and has commenced pipeline construction activities. The Joint Venture expects to receive at least one further Expression of Interest.
Reporting Schedule: This is the last progress report of the current drilling and testing campaign.
The Edirne License Joint Venture comprises Otto 65%, Incremental 15% (earning) and Turkish Operators Merty Energy and Petrako Limited - 10% each.
"We have been most encouraged by the success of our gas exploration campaign to date, with the confirmation of two potential producing gas wells - and we hope to unlock further gas targets shortly, with this next phase of exploration in Turkey," said Alex Parks (CEO of Otto Energy).
West Perth-based oil and gas explorer Otto Energy Limited has assembled a balanced portfolio of oil and gas exploration and production projects in the Philippines, Turkey and Argentina.
Otto's 100% subsidiary of NorAsian Energy Limited (NorAsian"), is Operator of SC 50, which contains the Calauit Oilfield (Otto - 65% WI). A custom built semi-submersible drilling and production rig will be leased from late 2007 for a 3 year period for development and production of the Calauit Field and other drilling in the Philippines by Otto. The Calauit Oilfield contains 39.4 mm barrels of oil in place of which 6.44 mm barrels are estimated to be recoverable (mean category). Other licenses include East Visayan (SC 51 Otto -50% WI), Ultra Deep Water Palawan (SC 55 Otto -55% WI).
Otto has one of the largest publicly owned acreage holdings offshore Philippines, with a total area of over 15,000 sq km (over 3.7 million acres). Canadian Vital Resources Corp ("Vital") agreed to acquire a 35% interest in SC 50 and a 30% interest in SC 51 and SC 55 on advantageous terms to Otto.
Otto has 65%-80% in 3 gas prospective licenses in the onshore Thrace Basin of European Turkey. Otto has two gas discoveries, which it hopes to commercialize in 2007. Incremental Petroleum Limited ("Incremental") agreed to acquire 15% in the Edirne License by carrying out a $3million exploration program, which included acquisition of a 185km seismic survey (now complete) and drilling of Koyustu- 1, testing of Bati Umur-1, drilling of Yagci-1 and testing of Umur-1.
Otto and Oromin Explorations Ltd ("Oromin") agreed to a farm in arrangement, whereby Otto will initially earn a 32.48% working interest in the Santa Rosa Block in the oil prolific onshore Cuyana Basin of the Mendoza Province of Argentina - by contributing US$1.4m towards drilling with option to earn an additional 8.7 percent.
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