Regal Petroleum has provided the following update on its operations in Ukraine.
David J Greer, CEO of Regal, commented, "We are delighted to be spudding the second of our new generation wells targeted at increasing our Ukrainian production and reserves and are especially pleased with the excellent progress that the first rig has made on drilling casing MEX-106."
"We are also very pleased to be making good progress on securing a loan facility with Macquarie with the intention of strengthening Regal's financial position and providing the funds to implement the Company's development strategy. We look forward to working together with Macquarie to conclude this facility in the very near future and a further announcement will be made in due course."
Following the successful importation and mobilization of two brand-new, American-built top drive drilling rigs contracted from Saipem, Regal has commenced drilling a series of "new generation" wells. These wells are intended to establish additional production from the proven Visean formation reservoirs ("B-sand Production Interval") and to appraise and develop the deeper Tournaisian formation reservoirs ("T-sands") which are anticipated to contain dry gas.
MEX-106 was spudded on January 11, 2009 in the Mekhediviska Golotvshinska (MEX-GOL) field, and has reached the planned section depth of 2,600 m for the 13.3/8" casing. The well has been logged in readiness to run and cement the casing. A total of four drill bits were used to reach this casing point as compared to a previous typical requirement of ten using the older generation of rigs. By comparison to the MEX-103 well, the performance of this "new generation" well represents an improvement of eight days over the time taken to drill to the same depth using the older generation rigs. As the new drilling crews become fully trained and familiar with this new generation of equipment, the Company expects overall drilling time and performance to improve further on future wells, particularly in the deeper hole sections.
Regal spudded its second "new generation" well, SV-58, on February 26, 2009 in its Svyrydivske (SV) gas and condensate field adjacent to the MEX-GOL field. SV-58 is planned to increase production from the known reserves of gas and condensate in the B-sand reservoirs, and is also planned to drill deeper into the T-sands to appraise and develop earlier gas discoveries at this level.
The Company currently expects that the two wells, MEX-106 and SV-58, will each take approximately six months to complete, which is around half the time usually taken to drill similar wells in this basin using regionally available rigs.
As drilling progresses, a subsurface model based on 3D seismic acquired during 2007 and 2008, which has been tied into data from the existing production wells drilled on the MEX-GOL and SV licenses, will be further refined to include data from MEX-106 and SV-58, with the aim of delineating a material increase in the Company's reserve base. The Company intends to commission a new competent person's report in Q3 2009.
Production rose from a September 2008 average of 75,586 m3/d gas plus 10 m3/d condensate (507 boepd) to a peak over 2,000 boepd in November 2008, before being scaled back to allow for the well intervention work and production management activity as described below. The current sustained production rate is 148,098 m3/d gas plus 45.3 m3/d condensate (1,156 boepd). The Company expects that production will increase to around 200,000 m3/d gas plus 55 m3/d condensate (approximately 1,520 boepd) by April 2009 on completion of the well intervention work. A significant increase in production is also expected on completion of the new development wells, MEX-106 and SV-58, later in the year on completion of the drilling operations described above.
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