Block M7 (Cirrus 42.75% and operator)
On July 30, 2007, partners approved the M7-A Field development budget and AFE which totals (euro) 62.7 million gross (approximately $91.7 million). Cirrus' net share is (euro) 26.8 million (approximately $39.2 million). The development plan includes re-entry and sidetracking of the suspended M7-5ST well with completion via a minimum facilities monopile wellhead platform. Gas will be produced via a 12.2 km, 6-inch pipeline to third party processing and export infrastructure. First gas is expected in the fourth quarter of 2008.
The M7 production license covers 410 km2 with water depths around 30 m. The M7-5ST well, drilled in 1996, discovered gas in overpressured, high quality Triassic-aged sandstones at true vertical depths around 2800m and was tested at a maximum rate of 30.1 mmscf/d of dry gas from a 22m gross interval.
Most likely recoverable reserves in the tested Triassic reservoir from a single development well are 32 bcf (as estimated by GLJ, Dec 1 2006, pursuant to NI51-101). Average first year gross production is expected to be 21 mmscf/d. Well M7-5ST also discovered and tested gas in overlying Jurassic-aged sandstones, although at low rates, and this reservoir is not planned to be completed and produced in the initial field development. These sands may be a target in future appraisal of the field.
Cirrus has accepted a written offer of financing from the Royal Bank of Scotland ("RBS") for a five year borrowing base facility (the "Facility") of (euro) 30.0 million. RBS subject to satisfactory documentation, due diligence and the achievement of all required conditions precedent will provide the Facility, which is usual in such agreements. The Facility will be used primarily to finance development of the M1-A and M7-A fields.
Cirrus' President, David Taylor, comments, "Achieving partner approval of the M7-A field development marks another significant milestone in Cirrus' strategy of developing fallow fields in the Netherlands. With the recent partner approval of the M1-A field development, Cirrus can now progress both developments in parallel to maximize synergies between the projects such as the contracting of the Noble Lynda Bossler drilling rig in second half 2008.
We are also delighted to have RBS as our financial partner for both the M1-A and M7-A developments. RBS has a well deserved reputation in financing North Sea developments and we look forward to building on this relationship as Cirrus pursues additional opportunities in the Dutch North Sea."
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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