Serica to Retain Half Interest in Columbus Discovery
Serica Energy (UK) Limited ("Serica") and BG International Limited ("BG") have mutually agreed not to complete the transaction, announced on November 14, 2006, under which Serica would have exchanged a 25% interest in Block 23/16f (containing the Columbus discovery) for a 25% interest in the neighboring Block 23/31, operated by BG. Serica and BG have agreed to continue to pursue the development of Columbus for their mutual benefit and that of their respective co-venturers.
Serica, as Operator of Block 23/16f, will now retain its 50% interest in the Block and in the Columbus discovery well and will press forward with appraisal of the discovery and potential early development. Discussions have already commenced with nearby infrastructure owners with a view to reaching a development sanction decision by the end of the year in the event of a successful outcome to appraisal drilling.
Serica has contracted the SEDCO 704 drilling rig to drill up to two Columbus appraisal wells in Block 23/16f commencing in the third quarter of this year.
Paul Ellis, Chief Executive of Serica, said that:
"We are confident that, with the positive results already obtained from the Columbus discovery well, the field is capable of rapid appraisal and development and we intend to press ahead with this program as a high priority, particularly given our increased stake in the project."
Serica announced the results of the first well drilled on Columbus on 20th December 2006. The well encountered a gross gas column of at least 125 feet in the Palaeocene Forties sandstone. A total of 85 feet of the reservoir was tested and the stabilized average production rates on a 56/64 inch choke during a five hour period were 17.5 million cubic feet of gas per day and 1,060 barrels per day of 47.5 degrees API condensate. The wellhead flowing pressure was 1,200 pounds per square inch and the inert gas content was less than 2%.
On the basis of an independent report carried out by RPS Energy Limited on behalf of Serica following the drilling of the discovery well, the most likely net contingent resources of oil equivalent lying in Block 23/16f attributable to Serica's 50% interest are 10.8 million barrels. The purpose of the appraisal wells to be drilled this year is to confirm the most likely resource figures and investigate the potential upside to these figures, while obtaining the further data required to refine the development concepts.
Serica's partners in Block 23/16f are Endeavour Energy UK Limited (25%) and EOG Resources United Kingdom Limited (25%).
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