Nils N. Trulsvik, InterOil's CEO, commented:
"This is a very interesting opportunity for InterOil and increases our position in West Africa. Furthermore, participating with Tullow, an operator with vast experience in the region, is very encouraging to InterOil. The project has the possibility of early production of gas and oil from discovered fields and to supply gas to a region which has a huge demand for energy. Independent engineers have estimated 2P reserves of 228 bcf of gas in the license. The gas pricing in the region has developed favorably in the last years, as gas to power has become a very interesting energy alternative for this region."
The Tano Shallow Water Contract is a 983 kmē offshore area with water depth less than 300 meters, which lies in the Ivorian Basin, close to Ghana`s western border. Three oil and gas fields and two small oil discoveries exist in the license.
North Tano Field was discovered in 1980, 20 km from the shore in 52m of water. It is a gas field with an oil rim, penetrated by 3 wells which tested up to 8.3 mmscf/d and 300 - 900 bopd of condensate. 2P reserves are estimated to 124 bcf by an independent engineering company.
South Tano lies approximately 32 km offshore, in water depths of 95 - 131m. It is also a gas field with an oil rim, and with a southern separate extension. GNPC (Ghana National Petroleum Corporation) drilled a well in 1992 and tested 13.3 mmscf /d and 1480 bopd. 2P reserves are estimated at 104 bcf by an independent engineering company. No oil reserve estimates are given.
West Tano is a heavy oil discovery that flowed 754 bopd of 15 degrees API oil. Estimated contingent resources are 23.4 mmbbls. Further testing is required to ascertain deliverability of the oil.
For the 35% working interest, InterOil will pay 37.9% until declared commerciality, and is committed to invest US$9.8 million in appraising of the North Tano field. Tullow Oil is the operator with an interest of 35% with Thani Ghana having 25% and Sabre Oil with 5%. Ghana National Petroleum Corporation (GNPC) is carried for 10%. A well, which counts toward commitment, is planned for June this year and will be designated an appraisal well for the North Tano Field. In total InterOil expects to invest between US$14 - 15 million in 2007, in order to evaluate feasibility of early gas production from the North Tano field.
The farm out agreement is subject to Government and partner approval.
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