Verenex has submitted a Final Appraisal Report for the A1-47/02 Field to the Area 47 Management Committee which includes representatives of Verenex, Medco International Ventures Limited and the Libyan National Oil Corporation ("NOC").
The Report recommends that the field be declared commercial as a first step in advancing a 50,000 bopd (gross) Phase 1 development project in the southern part of Area 47. Under terms of the Exploration and Production Sharing Agreement ("EPSA"), a declaration of commerciality by the Area 47 MC would clear the way to establish a Joint Operating Company ("JOC") with the NOC as a 50% partner to finalize the development plan and to execute the project.
The Report includes a comprehensive assessment of results from the A1-47/02 oil and gas discovery well drilled in late 2006 and three appraisal wells A2, A3 and A4-47/02 drilled over the 2007 to 2008 period and provides projections of reservoir performance under a range of depletion mechanisms, estimated recoverable resources, well performance profiles and development drilling requirements that will optimize oil and gas recovery over the life of the field.
The Report also presents a preliminary development plan, estimated costs and economics for a project that would include not only the A1-47/02 field as its core but also the nearby B1, C1, D1 and F1-47/02 oil and gas discoveries to comprise a multi-field project producing approximately 50,000 bopd (gross) of light sweet crude oil and 50 mmscfpd of natural gas. Verenex expects to submit final appraisal reports to the Area 47 MC for these additional fields by year-end 2008.
The Company believes that it is feasible to establish first oil production in 2011, subject to partner and NOC approvals and negotiation of transportation and marketing arrangements with the NOC and pipeline operators in the area. Preliminary development costs including facilities, gathering systems and sales pipelines are estimated to be in the range of US$800 to 850 million (gross). The Company's share of development costs is 25% under terms of the EPSA.
The Company is seeking a declaration of commerciality for the A1-47/02 Field and formation of a JOC as soon as possible in order to progress the Front End Engineering and Design work required to finalize the development plan for approval by the JOC.
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