Following the completion of drilling of Well #21 of the Company's Karaikozovsk block in late January 2007, the Company has been carrying out extensive testing of the well and building related infrastructure including gas treatment and separation plant as well as a 1 mile long pipeline. The Company intends to produce gas from the new well rather than oil as originally intended due to better expected profitability. According to the Company's geologists the initial gas production rate can be estimated at approximately 4.0 MMCF of natural gas per day. Using the prevailing market price for gas in the Ukraine equivalent to around $3.5/MCF the new well is expected to generate additional annual revenues of approximately $5 million. The Company plans to launch well # 21 into production in late July 2007.
The Company on April 18, 2007 announced an expansion of the license area of the Karaikozovsk lease by 34% to include the new area known as Lubovsk block. The company is correcting the previous press release to say that the newly expanded area is known as Pavlyukovsk block. Lubovsk block was already part of Karaikozovsk lease prior to the above expansion. The correct wording of the relevant part of the press release dated April 18, 2007 is provided below:
"The Company's wholly owned subsidiary Esko Pivnich holds an exploration license for Karaikozovsk lease in Eastern Ukraine. The license area was extended by approximately 34% from 21,242 acres to 28,490 acres. The new area known as Pavlyukovsk block is adjacent to Karaikozovsk lease currently operated by the Company and has similar geological structure. The Company plans to conduct seismic tests and start drilling an exploration well on the extended area in late 2007 and 2008."
Sunrise Energy Resources, Inc., through its wholly owned subsidiaries, Esko Pivnich and Pari, engages in the exploration and production of oil and gas in Ukraine. The Company produces from Karaikozovsk field in the Eastern Ukraine and develops Rakitnyansk, and Rogan properties in the Eastern Ukraine as well as Peremyshlyansk, Chukvinsk, Niklovitsk, Pilipivsk and Sheremetyevsk properties in the Western Ukraine.
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