Toreador Begins Production at Dogu Ayazli Offshore Turkey
Toreador Resources provided an update on operations and disclosed the preliminary development plan for the second phase of the South Akcakoca Sub-basin (SASB) natural gas project in the Black Sea offshore Turkey. Toreador has a 36.75% interest in the SASB project. TPAO (the Turkish national oil company) has a 51% interest and is the operator. Stratic Energy holds the remaining 12.25%.
Dogu Ayazli spur reconnected; initial production established from two wells
The operator, TPAO, has reported that the Dogu Ayazli platform in the SASB has been reconnected to the pipeline and that initial gas production has begun from the Dogu Ayazli-1 and -2 wells. Over the next week, the operator will be adjusting choke sizes on the Dogu Ayazli and Akkaya platforms to optimize production and a stable system flow rate should be established next week. The combined production from the Akkaya platform, which was put on production at the end of May, and the Dogu Ayazli platform is expected to be approximately 35 MMCFD gross from five wells.
Nigel Lovett, Toreador President and Chief Executive Officer, said, "I am very pleased that we have now reconnected the Dogu Ayazli platform and look forward to announcing the start of production from the Ayazli platform, which will complete the Phase I development. Together, these represent a truly transforming event for our company."
Ayazli deck on location and prepared for lifting
The deck for the Ayazli platform has been completed and towed onto location in the SASB project area for installation. The lift barge is on location and preparations are underway for lifting the deck onto the tripod. Two pre-drilled wells in the Ayazli Field have been completed and are ready for tieback operations once the deck is installed. Production can start as soon as commissioning activities are complete. Initial production from the Ayazli platform is estimated to be 15 MMCFD to the 100% interest, at which point full production from the SASB is anticipated to reach 50 MMCFD.
Thrace exploration well plugged and abandoned
The Karaburun-1 exploration well drilled in the Thrace permit area in the Black Sea offshore Turkey has been plugged and abandoned at approximately 1,300 meters depth. The well penetrated the targeted Sogucak formation deeper than expected and the anticipated reef structure did not develop. Toreador expects to record a dry hole cost of approximately $4 million in the third quarter of 2007. Toreador was the operator and held a 50% interest in the well.
Preliminary plan for the next phase of development in the SASB project approved by joint venture partners
In late August, the operator, TPAO, presented a preliminary plan, subject to revision during the detailed planning phase, for the second phase of development in the SASB which was approved by joint venture partners, Toreador Resources and Stratic Energy. The plan includes a four-pile, six-well slot production structure that can accommodate a platform drilling and completion rig; an offshore pipeline; tieback of two pre-drilled wells; and the drilling of up to four development wells. The plan is designed to achieve early production from the Akcakoca-3 and -4 wells, and includes additional production by the end of 2009 from the development wells to be drilled from the production platform.
On a gross basis, the operator preliminarily estimates capital expenditures of approximately $4 million in 2007, $74 million in 2008, and $42 million in 2009, or an aggregate of approximately $120 million. Toreador's 36.75% share of the estimated expenditures is approximately $2 million in 2007, $27 million in 2008, and $15 million in 2009, or an aggregate of approximately $44 million over the development period. Toreador expects to be able to fund its share of these development costs from operating cash flow, with no need for any form of external financing in order to meet these obligations.
The preliminary timeline, which is subject to revision, anticipates that detailed engineering plans and studies will take place during the remainder of 2007. Procurement and fabrication of the platform is expected to start in 2008 and finish in early-to-mid 2009. Pipeline construction, platform installation and tieback of the Akcakoca-3 and -4 wells is anticipated to take place in 2009 with first gas from the two pre-drilled wells expected thereafter. During the third and fourth quarters of 2009 up to four development wells are expected to be drilled from the platform and brought onto production.
"The second-phase development plan proposed by the operator represents a reasonable approach to securing first gas expeditiously," commented Mr. Lovett. "That will allow cash flows from the SASB to fund subsequent capital expenditures in this multi-phase, multi-year project."
Toreador management estimates that only 40% of the seismic anomalies in the immediate area have been drilled, with additional prospects both east and west of the current project.
Bati Eskikale-1 well expected to spud in early October
In the deeper waters of the SASB project area, an exploration well on the Bati Eskikale prospect is expected to spud in early October. The Bati Eskikale prospect lies along the same fault trend as the Akcakoca Field approximately 5.5 kilometers to the west-northwest of the Akcakoca-3 well. The Bati Eskikale-1 is targeting the same-stacked pay sands in the Eocene-age Kusuri formation that has proven to contain gas in 13 other wells in the project area. Seismic data on the prospect exhibits the same anomalies that have successfully indicated gas elsewhere in the sub-basin.
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