Pioneer has a substantial acreage position in the Ghadames Basin of southern Tunisia with an interest in five blocks totaling 3.9 million acres.
Since mid-July, Pioneer has drilled two new operated discoveries on the Jenein Nord Block, Angham and Methaq. Testing has been completed on the Angham well and the Farrah discovery well announced in July. The cumulative rates from individual tests on multiple oil-bearing zones in the two wells totaled approximately 5,000 bo/d. The Methaq well is expected to be tested in November.
With a total of seven discoveries on the Jenein Nord Block since late 2006, Pioneer is constructing production facilities, which are planned to have an initial gross capacity of 10,000 bo/d and be expanded to 20,000 bo/d during the second half of 2008. With continued drilling success, the facilities would be capable of being further expanded beyond 20,000 BOPD.
Pioneer plans to begin connecting the seven Jenein Nord discoveries to these facilities in late 2007. As the discoveries are tied in, gross production will gradually ramp up during 2008 and is expected to reach 15,000 to 20,000 bo/d by year-end. Pioneer will hold a 50% interest in the resulting production concession, assuming that ETAP participates at the maximum 50% level pursuant to the relevant agreements.
In the Adam Concession, Pioneer has participated in 15 wells since 2003 with greater than 90% success. The company holds a 20% interest in the concession, and the remaining interest is held by Eni (Operator), Talisman and ETAP, the state oil company.
Evaluation has been completed on the Nadir 1 well, a recent new field discovery in the concession, where four of the six oil-bearing sections in the well tested at an individual zone cumulative rate of approximately 4,000 bo/d. Facilities are in place to commence production from the well by the end of October.
Pioneer and the other participants have acquired approximately 1,450 square kilometers of 3-D seismic to optimize the drilling programs on the Adam, Jenein Nord and Borj El Khadra Blocks and plan to acquire an additional 1,900 square kilometers over the next year. Since the 3-D seismic acquisition began, Pioneer has had 100% success in exploration drilling and has identified more than 30 prospects and leads, some with resource potential as large as 25 MMboe. Pioneer plans to spud three additional wells in Tunisia over the remainder of 2007 and 15 to 19 wells during 2008.
A large-scale gas and condensate expansion project that could have a significant impact on Pioneer's production and reserves by 2011 continues to be pursued by Pioneer and the other participants. Sales of gas and condensate from the area are currently limited by the existing infrastructure. Pioneer and other producers in the country are working with the government to evaluate the opportunity to expand infrastructure and supply gas volumes from southern Tunisia to existing markets in northern Tunisia and southern Europe.
"We have built a strong position in the Ghadames Basin of southern Tunisia. This new core area for Pioneer offers low finding and development costs, attractive operating costs and excellent overall investment returns. We expect Tunisia to be an important contributor to our 12+% production per share annual growth target through 2010," stated Scott Sheffield, Pioneer's chairman and CEO.
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