Nordic Petroleum ASA reports that the final preparations for beginning the drilling process have now begun after financing from all parties is in place. This week has been utilized for remaining contract negotiations, and approval of the drilling license in Carmangay, as well as cost acceptance from all parties for carrying out the project. Following this, finalization of engagement contracts with the service and drilling contractors will be done. Drilling is expected to begin during the last half of February.
The delay from our previously announced date for drilling startup, 31st January, is due to circumstances beyond our control, and we have not been able to force the situation. The project continues as planned, regardless, with only a minor time delay. In one way the management sees this as an advantage as the cost level is reduced and the availability of rigs and other equipment is increasing, as a result of the recent market developments. There have been continuing contacts with contractors since the signing of the farm-in agreement.
Year round access for drilling and construction equipment is allowed in the Carmangay area, which lies south of Calgary, weather permitting.
Management is optimistic and expects good production results from the first well. With commercial results we have the option for drilling up to five additional gas wells and two oil wells in the areas. The option must be exercised within 30 days with drilling startup within 60 days.
The Skyway prospect is in a gas and oil rich area about 80km south east from Calgary with the mineral rights to the basement rock. The Skyway Prospect is a direct farm-in with Masters Energy in a Joint Venture with Skyway. The first well is estimated to $ 500,000 where Nordic will earn in accordance to total investment (currently $ 300,000), which will vary between 30-45% earned payout interest depending upon final investment and costs.
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