Mediterranean Oil & Gas has submitted its application to the Italian Ministry of Economic Development ("MSE") for an offshore production concession over the Ombrina Mare Oil & Gas Field, which the company operates and retains a 100% interest.
The Ombrina Mare Production Concession Application covers an offshore area of approximately 150 sqkm. The FDP has been designed to produce the 20 MMbbls and 6.5Bcf of certified 2P oil and gas reserves from the Ombrina Mare Oil and Gas Field. The proposed development has:
The current estimated capital expenditure for the FDP is 150 to 170 million euro based on oil services prices prevailing in 2008. The Company anticipates that it should be able to achieve significant capex savings as the oil services market is expected to become more competitive in 2009 and 2010 which is when we will be seeking bids to perform the work.
Ombrina Mare - Background
In 2008 MOG drilled the offshore Ombrina Mare 2 vertical ("OM2") and horizontal ("OM2dir") wells that confirmed the presence of the oil and gas fields and successfully appraised the Ombrina Mare oil field structure to a distance approximately 1.7 km east of the OM1 discovery well.
Oil is trapped in a Miocene and Cretaceous carbonate platform reservoir and gas is trapped in 16 sand levels in the middle-upper Pliocene gas sands complex. The OM2dir well was producing 17- 19 °API oil at a rate of approximately 1000 Bbls/d without any formation water. OM2Dir well was completed as an oil producer and a temporary platform has been set up.
Whilst drilling OM2, significant gas shows from 5 to 12 % (C1) were recorded in the Pliocene sand complex between 1500 and 1800m. Most of the Pliocene gas sands were associated with direct hydrocarbon indications such as seismic amplitude anomalies and/or amplitude versus offset visible effects on the seismic image and had a good correlation with the main gas sand levels of the discovery well OM1 (where the same sands produced 150,000 to 190,000 scm/day (5.3 to 6.7 MMcf/d) of dry gas (methane (C1) 99.5%)).
The Company chose to complete the OM2 well as an oil producer and therefore for technical reasons it was not possible to also undertake a production test of the several gas bearing Pliocene sands encountered by OM2.
P1 & P2 Oil Reserves of 20 MMbbls of recoverable oil were certified by independent reserve engineers in June 2008 and P1 & P2 gas reserves of 6.5 Bcf of recoverable gas were certified by independent reserve engineers in September 2008.
Sergio Morandi, the Company's CEO, stated, "Submitting the Ombrina Mare Production Concession Application just 6 months after the OM2 discovery represents a major operational success for our Company and confirms the Company's technical and operational ability to deliver on schedule. Our team continue to achieve major milestones on the path to developing Ombrina Mare and to our goal of becoming a medium sized oil and gas producer. We believe that Ombrina Mare development will benefit strongly from declining drilling and construction cost during the development phase and commence production at a time when we also expect there to be an improved oil price environment. "
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