Shelton Canada and Ukraine's largest oil and gas company, Ukrnafta, will drill their third development well as partners in the Kashtan Petroleum Joint Venture. Located in the Lelyaki oil field, east-central Ukraine, the well #304-A is expected to spud mid Q4, 2009. The new well has a projected total depth of 1930 meters and will be drilled as a directional well targeting light oil (42 degree gravity) further developing the P1and 2 and K-1 productive reservoirs. In addition, well interventions are underway on three suspended wells (#45, #60 and #179) in order to bring them back on production.
Drilling cost is expected to be 10 million Ukrainian Hryvnia which today is approximately US $1.17 million (net $526,500) and the well is expected to take approximately 100 days to drill and complete. The well is in close proximity to pipeline infrastructure for rapid tie-in.
"This third well is a continuing part of the Kashtan Joint Venture's plan to fully exploit the remaining oil reserves in the Lelyaki Oil field through optimal placement of infill production wells. The three well interventions show very good economics as the capital cost is much lower than new drilling. This new activity is very positive for the company," said Zenon Potoczny, Shelton's President and CEO. "Our strategic partnerships with leading Ukrainian oil and gas companies like Ukrnafta are a key reason for our success in Ukraine and further production additions are expected through 2010."
In addition, Shelton has recently received a dividend payment from Kashtan Petroleum of US $122,700 which will be used to cover corporate working capital requirements.
Further activity is also underway on Shelton’s projects in the Azov and Black Sea areas.
Shelton has been advised by its partner JSC Chernomornaftogaz that it has now received the final well and technical reports on the first well drilled on the West Biryucha structure. Analysis of this information is under way and may lead to the acquisition of an exploration license for the North Biryucha structure within the framework of the existing JAA with JSC Chernomornaftogaz.
In the Black Sea, planning is under way for the collection of a 300 kilometer two dimensional seismic program over the Archangelskoye structure which is anticipated to be commenced in the second quarter of 2010.
This program is being designed to identify the structural geometry of the Archangelske feature and will focus on the Lower Paleocene strata which produces in the offsetting Shtormovoye Field.
In other news, Mr. Zenon Potoczny, President, Shelton Canada Corp. (also President of Canada Ukraine Chamber of Commerce) has been awarded the Order of Merit, Class III, from the President of Ukraine Victor Yushchenko for his contributions to Ukraine in the fields of trade and investment.
The technical and corporate due diligence required for the previously announced Plan of Arrangement between Shelton and Petrosibir is progressing well with an anticipated November 6, 2009 date for the Shelton shareholders meeting to vote on the transaction.
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