SOCO International's Chief Executive, Ed Story, reported in the company's second quarter results that "in the first six months of the year SOCO has continued to perform strongly, progressing its key development projects, increasing production and setting the stage for the most extensive exploration campaign in the Company's history. Our Africa portfolio is an exciting opportunity to create a significant new growth story. The drilling in Congo will begin this month and with Vietnam development projects only awaiting final regulatory approval SOCO is well positioned to continue to deliver growth and value to shareholders."
SOUTH EAST ASIA -- VIETNAM
The Company's interests in the Cuu Long Basin are held through two companies, SOCO Vietnam Ltd (SOCO Vietnam), its 80% owned subsidiary, and its wholly owned subsidiary, OPECO, Inc. SOCO Vietnam holds a 25% working interest in Block 9-2, which is operated by the Hoan Vu Joint Operating Company (HVJOC) and holds a 28.5% working interest in Block 16-1, which is operated by the Hoang Long Joint Operating Company (HLJOC). OPECO, Inc. holds a 2% working interest in Block 16-1.
The Cuu Long Basin is a shallow water, near shore, oil rich basin defined by several high profile producing oil fields, the largest of which has been the Bach Ho field, which lies adjacent to both Block 9-2 and Block 16-1. Bach Ho has produced more than one billion barrels of oil to date.
Block 16-1; Te Giac Trang
The HLJOC received approval from Petrovietnam of the Field Development Area for the TGT field in May of this year. Subsequently Petrovietnam assumed funding of its 41% share of development costs as of July 1. The Field Development Plan (FDP) has been submitted for Governmental approval, the final hurdle in the regulatory process. Preparation of the FDP for submission has been an interactive process in conjunction with the appropriate regulatory and review committees and approval is anticipated to be relatively straightforward.
First oil is targeted for mid-2011. Tenders for a number of long lead items have been issued. Bids from the potential floating, production, storage and offloading vessel providers are currently under review. To date, seven exploration/appraisal wells have been drilled in the TGT field, with an average oil and gas flow of approximately 11,300 BOEPD from each well.
In April, the Company was informed by the HLJOC that the Vietnamese Government had approved, with agreed work programs, the application for the Te Giac Den (TGD) and Voi Trang (VT) Appraisal Areas within Block 16-1.
The TGD Appraisal Area encompasses an area of 150 square kilometers including the high pressure, high temperature (HPHT) discovery well TGD-1X-ST1 on Prospect E, and the analogous E South Prospect. This area borders the southern boundary of the TGT field. Seismic reprocessing over the TGD appraisal area and the TGT field is currently underway with final results expected in September/October 2009. Initial preparation has begun for drilling a TGD appraisal well in the second/third quarter of 2010.
Following an assessment of the commerciality of the previous discoveries in the awarded area in the VT Appraisal Area, the HLJOC opted to relinquish this area. Petrovietnam issued a formal approval of the relinquishment in July.
Block 9-2; Ca Ngu Vang
With the drilling and suspension of the CNV-6P development well, the initial phase of the development drilling program of this field, which was brought on production in July of 2008, has been concluded. Based on the wells drilled thus far, the fracturing in the eastern lobe of the field of the Basement reservoir is not as intense as that indicated by wells drilled in other parts of the structure.
It is premature to speculate as to any impact on recoverable reserves or ultimate lined out production rates. The HVJOC will continue to analyse results of the drilling and performance to date before commencing water injection and considering further drilling options later in the year.
Production net to the Group's working interest has averaged 3,083 BOEPD for the first six months of 2009.
SOCO's 99.93% owned Thailand subsidiary, SOCO Exploration (Thailand) Co. Ltd. (SOCO Thai), holds a 40% interest in the Bualuang oilfield located offshore in the Gulf of Thailand.
In the second quarter of this year, the operator drilled two horizontal attic wells in the field. The purpose was to maximise oil production from the strong water driven reservoir, whilst minimising production of water. Production net to the Group's working interest averaged 2,663 barrels of oil per day (BOPD) prior to drilling these wells, increasing to 4,412 BOPD for the 15 days preceding this report and subsequent to bringing the two new wells on production. For the full period, production net to the Group's working interest averaged 3,651 BOPD for the first half of 2009.
In the first half of 2009, the operator reported a reserves upgrade in the field, rising from 20 million gross proven and probable barrels of oil to 26.3 million gross proven and probable barrels of oil recoverable. Under the terms of the farm-out to the operator, within 12 months of the end of the Phase II period, the Farmee will engage an independent reservoir engineer to perform an analysis of the proven reserves contained in the Bualuang field. The Farmee will pay SOCO Thai an amount equal to one dollar for each barrel of proven reserves over 10.4 million barrels.
AFRICA -- REPUBLIC OF CONGO (BRAZZAVILLE)
SOCO Exploration and Production Congo SA (SOCO EPC), which is held through the Company's 85% owned subsidiary SOCO Congo Limited, holds an interest in and is the designated operator of the Marine XI and Marine XIV Blocks offshore the Republic of Congo (Brazzaville).
SOCO EPC has finalized the terms of a rig contract for a two well drilling programme in the Marine XI Block that is expected to commence within days of this report as the rig is now in transit to the location to commence the Liyeke well on the S1 prospect. The Liyeke well is targeting a Sendji prospect above the salt layer. A follow-up well will appraise the existing sub-salt Viodo oil field at a location approximately one kilometer from the field discovery well.
In March, SOCO EPC received Governmental approval for its farm-in to the Marine XIV Block. Since that time, SOCO EPC, as operator, has completed a 100 square kilometer multi-azimuthal 3D seismic program. The seismic is currently being processed and a well is planned for 2010.
DEMOCRATIC REPUBLIC OF CONGO (KINSHASA)
SOCO DRC Limited (SOCO DRC), the Company's 85% owned subsidiary holds 99.9% of SOCO Exploration and Production DRC Sprl (SOCO E&P DRC), the designated operator with an 85% working interest in the 800 square kilometre Nganzi Block, onshore the Democratic Republic of Congo (Kinshasa). Cohydro, the state owned oil company, holds the remaining 15% interest.
SOCO E&P DRC completed a 360 kilometer 2D seismic survey late last year over the coastal Nganzi Block. Initial interpretation of the processed seismic has been very encouraging as several large structures have been identified. Interpretation will continue with drilling likely to commence in the second half of 2010.
The Group's applications for licences elsewhere in the country are pending a Presidential Decree on Block 5 in the Albertine Graben and the finalisation of a production sharing agreement on a large interior block.
SOCO Cabinda Limited (SOCO Cabinda) holds a 17% participating interest in the Production Sharing Agreement (PSA) for the Cabinda Onshore North Block. SOCO holds 80% of the interest in SOCO Cabinda. Sonangol P&P, the Angolan state owned oil company, holds a 20% interest in the PSA and is operator.
The same contractor that conducted the seismic program on the Nganzi Block has been mobilised to acquire both 2D and 3D seismic in Cabinda North. Acquisition of the 2D seismic began earlier this month.
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