Arawak Energy Corporation announced the acquisition of a 100% interest in the South Sotchemyu Block in the Komi Republic in northern Russia adjacent to the company's existing producing assets.
Arawak, through its 100% subsidiary OOO Arawak Geoservices, was awarded an exploration and production license for the Block subsequent to an auction held on November 9, 2007, by the Territorial Agency on Subsoil Use of the Komi Republic. The 71.4-square-kilometer license for the block has now been duly issued to the company. Under contract terms, success in the initial five year exploration period will be followed by the rights to an additional 20-year production phase, with the primary license term expiring in November 2032. The auction documentation indicated resources of 5 million barrels attributable to the block. The total cost of the acquisition was less than U.S. $1 million.
The block is contiguous to Arawak's existing operations and shares its east boundary with ZAO Pechoraneftegas area and its south border with the OOO NK Recher-Komi areas, in both of which the company holds a 50% operating interest, and is surrounded by other producing fields.
The block is traversed by an infrastructure corridor, which includes the Transneft trunk oil pipeline and the Northern railway, and which will facilitate the export of crude. Except for the northeast section, the Block is evenly covered by a network of seismic lines. Initial plans include reprocessing the existing seismic coverage followed by a 500 kilometer 2D shoot prior to exploratory drilling to assess block potential. It is expected that the first well will be drilled as early as next year.
Geographically, the Block is located in the prolific Timan-Pechora Basin. The target producing horizon is the shoe-string Devonian carbonate reservoir draped over a shelf edge reef complex. The entire complex is bounded by structural closure, which defines the oil-water contacts. Reservoir pressure support is typically provided by an almost infinite acting aquifer influx.
"We are delighted to have acquired our fourth block in Komi and our second 100% owned block," Alastair McBain, CEO of Arawak, said. "Situated as it is between two of our existing producing fields on the same geological trend, we are confident that we can add to our reserves and production inventory in Russia in the near future."
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