The acquisition is being made by Sibir in a private corporate transaction valued at $50 million, payable in cash, and is conditional on approval by the Russian Federal Anti-Monopoly Service (FAS).
Known as the Koltogorsky Blocks, the newly acquired exploration acreage lies near the giant Samotlor oil field, one of the largest in the world, and is bordered on the west by a number of Samotlor satellite fields and on the east by a range of other producing properties in Russia's most prolific oil-producing region.
The Koltogorsky Blocks benefit from excellent in-place infrastructure including a Transneft trunk pipeline, a gas pipeline and high-voltage power lines. The blocks also benefit from a paved roadway, and a navigable river allowing for cost-effective delivery of cargo and equipment.
Since the licenses were originally issued in 2004, over 2,500 kilometers of 2D seismic profiles have been acquired, processed and interpreted, indicating the existence of 35 identifiable oil traps in the Lower Cretaceous and Jurassic at depths of 2,600 to 3,200 meters.
The licenses require the drilling of eight exploration wells--one in each block-- over the course of the next two years, and total exploration expense for this phase is expected to reach $50 million. Sibir subsidiary, Magma, which operates the Yuzhnoye and Orekhovskoye fields, will manage all exploration activities from its operational base 170 kilometers southwest of the Koltogorsky Blocks.
Commenting on the announcement, Sibir CEO, Henry Cameron, said:
"With our key upstream assets delivering robust growth in production, Sibir is pursuing an aggressive program of upstream expansion and the Koltogorsky acquisition is the first fruits of that effort. Koltogorsky is consistent with our policy to engage in large scale projects and is well within our technical and financial capabilities. With the first phase of seismic surveys behind us and drilling expected to start soon we won't have long to wait for the first results. Sibir has been successful by tackling big world class projects and Koltogorsky has the potential to become the next of these."
The Russian classification of C3 hydrocarbon resources constitutes prospective resources presumed to exist based on indicative geological and geophysical evidence, but as yet unverified by drilling.
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