Block M1a (Cirrus 47.5% and operator)
On July 16, 2007, EBN signed the Agreement of Cooperation ("AOC") and became a participant in the development of the M1-A Field with a 50% working interest. Under the terms of the AOC and in return for acquiring the 50% working interest, EBN will reimburse historic costs of euro 19.0 million ($27.2 million). To its working interest and after estimated third party and tax deductions, Cirrus estimates that it will receive approximately euro 17.0 million ($24.3 million) net with receipt of these monies expected in August 2007.
On July 24, 2007, partners approved the M1-A Field development budget and AFE which totals euro 37.3 million ($53.3 million) gross. Cirrus' net share is euro 17.7 million ($25.3 million). The development plan includes re-entry and hydraulic fracture stimulation of the suspended M1-3 well with subsea completion and tie-back to existing gas processing and export infrastructure. First gas is expected in the fourth quarter of 2008.
The M1a license covers 212 km(2) with water depths around 40m. The M1-2 well, drilled in 1992, discovered gas in over pressured, low permeability Triassic-aged sandstones at depths around 3900m and was appraised by well M1-3, drilled in 1998. Unstimulated, over a 13-hour period and through a 16/64" choke, M1-3 averaged a flow rate of 4.9 mmscf/d at 3,260 psig of dry gas from a 28 m gross interval.
Most likely recoverable reserves, as estimated by GLJ (Dec 1, 2006) pursuant to NI 51-101, from the single producing well are 35 bcf from a proven plus probable gas-in-place of 93 bcf. Average first year gross production following a successful hydraulic fracture is expected to be in the range of 10 to 14 mmscf/d.
Further development drilling on the field may subsequently be undertaken to increase and accelerate recovery of the potentially large gas-in-place volumes, which the company estimates may be in excess of 230 bcf.
Terms have been agreed to contract the Noble Lynda Bossler jackup rig to conduct re-entry and completion operations on the M1-3 well in the third quarter, 2008. This is expected to form part of a broader well operations and drilling program for Cirrus during the second half of 2008.
Cirrus' President, David Taylor, comments: "We are delighted to receive the support of the Dutch state and participation of EBN for Cirrus' first operated field development on the Dutch continental shelf. This is a significant milestone for Cirrus as the company pursues its strategy of acquiring and developing fallow fields in The Netherlands."
Cirrus Energy Corporation is an international oil and gas company headquartered in Calgary and currently has 47.5 million fully diluted common shares outstanding.
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