Cirrus Energy Corporation has provided the following operational update regarding our activities in The Netherlands.
M7-A Development Project (Cirrus 42.75%)
Fabrication of the M7-A production platform was completed by end September and the various platform components were loaded onto the installation vessels in IJmuiden harbour. However, persistently bad weather conditions have precluded the installation barge from moving to the M7-A location for the past eight consecutive weeks. As the installation contract expired at end November, the platform components have been offloaded and the installation vessels released. Availability of alternative suitable installation vessels is being investigated at the present time. First gas from the M7-A field will depend on the eventual timing of platform installation and subsequent drilling of the new development well but is not currently expected before mid 2009. The current best estimate of remaining capital expenditures net to Cirrus to bring the M7-A field into production is approximately €16.0 million.
Partners in the M7-A development are DSM Energie B.V. (5%), Energy06 Investments B.V. (2.25%) and EBN (50%).
M1-A Development Project (Cirrus 47.5%)
Fabrication of the subsea wellhead and high pressure protection system continues and the contractor has now indicated delivery in May 2009. Consequently, offshore installation and well related activities are currently planned for the third quarter of 2009 although this timing also depends on the timely availability of adequate transportation and processing capacity. Commercial discussions with the relevant third parties are continuing. The current best estimate of remaining capital expenditures net to Cirrus to bring the M1-A field into production is approximately €16.0 million.
Partners in the M1-A development are Energy06 Investments B.V. (2.5%) and EBN (50%).
L8-D Field (Cirrus 25.48%)
The Noble Lynda Bossler rig has arrived at Chevron's L11-A production platform for the drilling of the L11-13 well into the prognosed southern extension of the L8-D gas field. The deviated L11-13 well will be drilled to a total measured depth of approximately 5500 meters (approximate true vertical depth 4200 meters) and is expected to take a total of 90 days at an estimated gross cost to the L8-D Unit partners of €30.0 million.
The L8-D Field was discovered by well L8-16x drilled in 2004. The well was drill stem tested at rates up to 430,000 Nm3/day (16.1 MMscf/day) of gas from a Rotliegend sandstone reservoir at a depth around 3850 meters. The field potentially straddles three licenses (L8a, L8b and L11a) and hence an L8-D Unit has been set up to avoid future equity re-determinations. Equity interest partners in the L8-D Unit are expected to be Cirrus (25.479%), TAQA (15.000%), DSM Energie B.V. (2.880%), Energy06 Investments B.V. (1.341%), EWE AG (13.400 %) and EBN (41.900 %).
Under a previously announced farm-in agreement with TAQA, Cirrus will fund 14.079% of the L11-13 well capital costs up to a total expenditure cap (including testing) of €28.0 million and remain operator of the L8-D Unit. Expenditures in excess of the cap will be funded according to partners' equity interests in the L8-D Unit. The current best estimate of capital expenditures net to Cirrus to both drill the L11-13 well and, if successful, tie-in for production is approximately €6.0 million.
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