The estimated drilling cost for both wells is US$10.8 million. Bounty will earn a 10 percent interest in the 2,600 sq km Nyuni Block by contributing 10 percent of the well costs, effectively participating in these wells on a one-for-one basis. In the event of an oil discovery Bounty will contribute an increased share of the drilling costs to a maximum of a five-for-three basis.
Bounty Managing Director, Tom Fontaine, said the two wells, Nyuni-1 and Okuza-1, would test large structural features delineated by 2D seismic. The first well would be drilled on the Nyuni prospect.
"Mapping indicates that these two features may contain considerable reserves," Mr. Fontaine said. "The Nyuni prospect may hold recoverable reserves of up to 260 million barrels of oil (mmbo) or if gas is present, 870 billion cubic feet (bcf). Recoverable reserve estimates at Okuza range up to 100 mmbo or 390 bcf.
"The closest exploration well to these prospects, Songo Songo-1, was a major gas discovery. Located only 20 km south west of the Nyuni prospect, the Songo Songo gas field contains proved and probable reserves of 590 bcf. The field is due to deliver gas to the capital Dar es Salaam in 2004 through a new, internationally financed, common-user pipeline system, currently under construction. If gas is discovered in the Nyuni Block, capacity in this pipeline will be available to the Nyuni Block co-venturers.
"Whilst we believe the Nyuni and Okuza structures may contain oil, a gas discovery could likely be commercialized because of this infrastructure.
"The case for the presence of oil is strengthened by the fact that an oil seep was recently discovered on Nyuni Island, directly above the structure."
Mr. Fontaine said that even though the prospects were 30 km offshore, they both had small islands above them. "This allows the drilling to be undertaken with a conventional land drilling rig, a much more economical approach than using an offshore rig." he said. "Exploration activity is increasing in East Africa with a number of larger explorers, including Shell, Maurel & Prom and Petrobras, planning exploration programs in the offshore sector. Bounty's partnership with Aminex in Tanzania allows us to effectively get in on the ground-floor in an under-explored area that we believe has great potential.
"Aminex is an experienced, independent, oil and gas company with a proven track record of international oilfield exploration, development and production in regions such as Africa, the USA and the Russian state of Tatarstan. Aminex's 10% investment provides it with an exclusive first right to participate in existing Bounty permits in Australia and New Zealand for a three year period. This will enhance Bounty's ability to progress a number of its exploration opportunities. The investment reflects Aminex's interest in the long term strategic potential of Bounty's Australian and New Zealand assets. Aminex will also be given a seat on the Bounty board to strengthen the symbiotic relationship. "We look forward to a strong and mutually beneficial alliance with Aminex." Drilling at Nyuni is expected to take 70 days.
Partners in Nyuni block are: Ndovu Resources as operator with 60%; Petrom SA with 30% and Bounty Oil with the remaining 10%. Ndovu Resources is a subsidiary of Aminex.
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