Dover Announces Results of 2nd Egyptian Well
Dover Petroleum Corp. reports that the Senusret jackup has reached the second well target location (EWA-1X) in the northern region of the area covered by the East Wadi Araba Concession in the Gulf of Suez, Egypt. The drill rig has completed a 3 hole coring test to confirm structural stability for the jack-up and is now in the process of setting the 30 inch conductor casing, prior to commencing drilling. The drill program will test a number of horizons that could contain potential hydrocarbon reserves. The target total depth is estimated to be 6,000 feet. The Company anticipates a strategic and carefully planned drill program to test all available zones of potential hydrocarbons. These same zones have produced over 60 million barrels of recoverable oil in the nearby Warda oilfield, 1.8 miles northeast of EWA-1X. Drilling of the EWA-1X target is expected to be completed in approximately 20 days if no drilling problems are encountered.
The Company would also like to provide a brief summary of the drill results of its first well target (EWA-2X) drill program that was drilled in December 2002 and early January 2003. This summary was prepared by the Company's Geophysicist, Dr. Ghareeb Awad.
Dr. Awad estimates that potential reserves at the EWA-2X target could range from 43,000,000 to a possible 274,000,000 barrels of recoverable oil reserves. These estimates are based on the porosity, thickness and drainage area of the Middle Miocene Kareem Formation ("Kareem") and Eocene Thebes Formation ("Thebes") dolomitic limestones as mapped geophysically and measured during electric logging and testing of the well, and are made with the following assumptions:
- Oil saturation is 80%.
- A potential recovery factor of 40%.
- A shrinkage factor of 15%.
- A drainage area of 4 sq. km (1,600 acres).
There are three possible reasons that may have resulted in the failure of the two drill stem tests to flow oil from the Kareem and Thebes zones:
- The invasion of seawater while drilling was substantial, possibly 200,000 barrels, and could have displaced the oil far from the borehole.
- The oil has suffered biodegradation, and may be heavy and immovable.
- The formation pores may be too tight to allow oil to flow.
It is the Company's opinion that the most likely reason for oil not flowing is item a) as noted above, and requires that we return to the EWA-2X location in the future to try and test the potential hydrocarbon zones in a step-out well located far enough away from the first well to avoid the previous water contamination areas. The Company also plans to test the Matullah and Nubia horizons where the probability of having a lighter oil is more likely since at depths of 5,000 plus feet below surface, the microorganisms that biodegrade oil do not penetrate to such deep reservoirs as easily. Previous drilling failed to test these deeper zones due to technical complications related to fluid losses in the borehole. This future testing of EWA-2X is subject to additional financing, a new seabed survey and the availability of a drilling rig.
In summary, Dover Petroleum is optimistic that the first well target (EWA-2X) potentially has significant commercially recoverable quantities of crude oil, and that all the previous drilling and testing technical difficulties can be overcome. However, no assurances can be provided that EWA-2X contains any crude oil, or if such crude oil exists, it can be recovered in a commercially viable manner. In addition, substantial additional capital will be required in order to bring such oil into production, and no assurance can be provided that such capital will be available.
Dover Petroleum Corp.'s wholly owned subsidiary, Dover Petroleum Egypt I
Inc., has a 56.25% interest in Dover Egypt I Joint Venture, which is a party
to an Option Agreement entitling that joint venture to acquire 100% of the
Operator's interest in the East Wadi Araba Concession Agreement.