The Channon well (47/8c-4) (Venture operated - 54%) commenced drilling from the Noble Julie Robertson jack-up rig on 4th June and reached a total measured depth of 13,582 feet on 26th July. The well was designed to test two Rotliegend fault blocks extending across Blocks 47/3h and 47/8c and gas was discovered in both. Well log data indicates a gas column in excess of 215 feet TVD and net pay of 109 feet TVD and the well has tested gas at stabilized rates up to a gross rate of 55 million cubic feet per day ("MMcfpd") on a 56/64th choke. The maximum flow rate was limited by the test equipment and no formation water was produced during the test. The well has been suspended for later completion as a producer. Estimated recoverable reserves from the Channon reservoir are 30 to 40 billion cubic feet ("Bcf") and initial production is expected to be around 35 MMcfpd, both net to Venture. This is at the top end of pre-drill expectations.
Discovery of gas at Channon creates the potential for a joint development with the Barbarossa Rotliegend gas discovery located in Block 47/9c (Venture operated - 90%). Venture will earn its 90% interest in Barbarossa once an appraisal/development well planned for early 2008 has been drilled by the Noble Julie Robertson. Expected reserves from this low risk well are around 30 Bcf net to Venture and the most likely development plan is a 5 km tie-back to the Mercury gas field subsea manifold. In the success case the development will be engineered to also tie in the newly discovered Channon field. If Barbarossa is successful a combined development could be onstream in the fourth quarter of 2008 with initial production of around 70 MMcfpd, net to Venture.
Appraisal well results on the Pilot (Block 21/27a, Venture operated - 70.4%) and Narwhal (Block 28/2a, Venture operated - 100%) heavy oil discoveries have now been fully evaluated. Oil samples recovered from the Pilot well are somewhat heavier and more viscous than those from previously drilled Pilot wells and this new data will need to be incorporated into the viscosity model that had been developed. Further work will now be carried out to better determine the extent of the commercially recoverable oil. To the south of Pilot, the appraisal well drilled adjacent to the Narwhal discovery failed to encounter hydrocarbons and the well has been plugged and abandoned. The Narwhal discovery was included in acreage that was awarded to Venture in the 23rd UKCS Licensing Round in 2005.
The appraisal well drilled on the Millburn (Block 22/22c, Venture operated - 70%) discovery encountered 12 feet of oil-bearing sandstone. However, this relatively low level of productive reservoir is considered sub-economic and the appraisal well has been plugged and abandoned.
Commenting on the news, Mike Wagstaff, Chief Executive said:
"I am pleased to be able to announce a successful gas well on Channon. The test rates achieved and reservoir properties encountered mean that Channon is a standalone commercial discovery. However, the prospect of a joint development with Barbarossa which could potentially deliver incremental combined production of around 70 million cubic feet per day net to Venture by late 2008 provides additional upside potential.
"The drilling results in our heavy oil accumulations and Millburn are disappointing but we will now re-examine the reservoir model on Pilot as the oil in place volumes remain material. Our active 2007 drilling campaign continues and we now look forward to the drilling results from the Selkirk appraisal well.
"As we head toward the winter gas season the hydraulic fracturing work on the Chiswick development is progressing well and we have spudded the second development well. We expect to have first gas on stream in September at rates of around 55 to 60 million cubic feet per day, net to Venture."
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