Aurelian has signed a commitment letter, through its 90% owned Polish subsidiary Energia Zachód Sp. Z o.o. ("EZ"), with Polish drilling company Nafta Piła to drill two appraisal wells on its Siekierki tight gas project in Poland.
The wells will use Nafta's IDM 2000 state of the art drilling rig which was built in 2008 and is currently working in Germany. The rig will be mobilised in May 2010 and is expected to spud the Trzek-2 appraisal well in the same month. Both wells will require significant horizontal sections to be drilled. Once the Trzek-2 well is completed the Nafta 2000 rig will move on to the next appraisal well on the Siekierki project: this is expected to be drilled the second half of next year.
Nafta Piła is recognised as a world class international drilling contractor with experience in drilling horizontal wells. It is based in Poland and is active in Europe, across the Indian sub-continent, the Middle East and Northern Africa. Nafta Piła successfully drilled Aurelian's first appraisal well on Siekierki in 2007, a vertical well, which flowed at an initial rate of 7 mmscf/day. The horizontal appraisal wells are expected to flow at higher rates. Further details of the appraisal wells will be released shortly before they are spudded.
In October Aurelian announced that, through EZ, it had entered into an agreement with Kulczyk Investments SA ("KI") for the sale of gas produced from EZ's Siekierki field. Under the Agreement prices will be set by reference to the published PGNiG S.A tariff price for system high methane gas fuel (E-39.5 MJ/m3) which is currently PLN 0.91/m3. Further details can be found in the gas sales agreement press release which can be downloaded from the Aurelian website.
Rowen Bainbridge, Chief Executive of Aurelian, commented, "I am delighted to have Nafta Piła and the IDM 2000 available for our Siekierki tight gas project. We now have a first class rig and a first class drilling contractor, with extensive expertise in these kinds of wells, to drill two exciting appraisal wells on our flagship project. As announced in our strategy update on 26 October 2009, we continue to evaluate technical partners and sources of capital to optimize full field development.
"This follows on from the recently signed gas sales agreement with Kulczyk Investments and is another significant milestone for Siekierki; advancing the project and in doing so creating further value for shareholders. We look forward to working with Nafta in making the Siekierki project a success and delivering first gas for our customer under the agreement in 2011."
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