Ascent Drilling is to be owned 50% by Ascent Resources and 50% by Midnight Energy Limited, a company controlled by Malcolm Groom, also a director of Ascent Resources. Ascent Drilling will be acquiring 45% of the shares of Perazzoli and Ascentís interest will be in 22.5% of those shares.
Under the terms of the letter of intent signed between Perazzoli and Ascent Drilling, Perazzoli will acquire the 100 ton Corsair 300 drilling rig from its parent company and is to order a WEI DS-205 200 ton-drilling rig for delivery in mid 2008. The Italian manufactured new build WEI rig is one of the latest generation of hydraulic rigs, which are low profile, designed for minimum environmental impact, and capable of drilling to over 3,600m. The Corsair rig, which has a drilling capability of over 2,000m, has been used continuously by Ascent in Spain and Italy over the past 8 months to drill 3 wells and for the deepening of the Anagni-1 oil discovery well.
Across Europe there is currently a shortage of drilling contractors. This is due to an increase in exploration activity over the past two years, including the German geothermal initiative, which has adsorbed drilling capacity. In Italy, the shortage of properly certified drilling rigs is particularly severe. With a 22.5% share in Perazzoli, Ascent will be able to prioritise its drilling slots as well as gain financially from the rental of the two rigs to third parties. Perazzoli has a strong order book and contracts with other operators in Italy will see both rigs fully engaged for the foreseeable future. Ascent will initially use the rigs to drill on its Italian and Swiss projects and expects to use them for circa 20% of their operational time.
Ascentís drilling plans with Perazzoli includes the Gazzata exploration well on the Bastiglia exploration permit in the Po Valley, which is being fully funded by its 50% farm-in partner Deltana Energy Limited, the first of the Swiss appraisal wells, where a farm-out is under discussion, as well as two appraisal wells at Anagni and a further exploration well on the Frosinone permit. Drilling on projects in Hungary, Slovenia and the Netherlands will be with other contractors.
Ascentís Managing Director Jeremy Eng said, "We have over 20 projects in our portfolio and the seven wells drilled to date have been on only four of these projects. These first wells were the easier shallow wells all less than 2,000m. The next wells are generally deeper and target more prospective and substantially larger targets. Market conditions, particularly in Italy at the present time, make taking a strategic interest in an Italian drilling company very advantageous to Ascent. Not only does it allow us to drill at a time convenient to us but it will also contribute to revenues."
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