AJM Petroleum Consultants ("AJM") has completed an independent, initial resource assessment of Vast Explorations's Qara Dagh Block, in the Kurdistan Region of Iraq. AJM has estimated an unrisked "Best Estimate" of 2.7 billion barrels of Petroleum Initially in Place as of December 31, 2009.
Ahmed Said, President and CEO, stated, "The independent assessment reaffirms management's estimates of the significant reserve potential on the block. Recent substantial discoveries in adjacent blocks have demonstrated the prolific nature of this region. The Company is entering an exciting phase as it prepares to spud its first exploration well in March 2010 targeting multiple reservoir horizons."
Prospective resources are those resources of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. The chance of commerciality is the product of these two risk components. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources.
Prospective oil resources are undiscovered resources that indicate exploration opportunities and development potential in the event a commercial discovery is made and should not be construed as reserves or contingent resources.
The Qara Dagh Block
Vast Exploration has a 37% interest in the Qara Dagh Block. The Company obtained a 27% interest pursuant to a production sharing contract signed in 2008 with the Kurdistan Regional Government and holds an additional 10% interest in the Qara Dagh block subject to the issue of 60,000,000 Vast common shares in accordance with the directions of the Kurdistan Regional Government. A 354 kilometer 2D seismic program was completed in June 2009 and plans have been finalized to spud the first exploration well in March 2010. The block covers 846 square kilometers and has a large linear surface anticline, which is on a similar trend as the existing oil fields in northern Iraq and the more recent discoveries in Kurdistan at TaqTaq and Miran. Data processing and interpretations have been completed and integrated with regional and surface geological models. Three main prospects, which correspond to the three domes on the surface structure, have been confirmed by seismic mapping.
The Qara Dagh Block is located in the prolific Zagros foldbelt which extends from southern Turkey across northern Iraq and into southwest Iran. Large anticlinal structures, which formed during collision and formation of the Zagros Mountains, contain giant and supergiant accumulations of oil. The large surface structure on the block is known as Qara Dagh Mountain ("Black Mountain" in Kurdish) and is a prominent anticline which rises as high as 600 meters above adjacent valley floors. This 65 kilometer by 5 kilometer feature has steeply dipping limbs and an exhumed central valley which exposes progressively older stratigraphy towards the anticlinal core. The Eocene and Paleocene Pila Spi, Gercus and Sinjar formations of lower Tertiary age extend along the interior slopes of the mountain and the central valley is covered by the Paleocene Kolosh shale.
The subsurface structure is characterized by a large thrust fault, which extends along the length of the southern limb of the surface anticline, and a large fault bend fold in the overthrust section which is comprised of Cretaceous, Jurassic and Triassic strata.
There has been no prior oil exploration on the Qara Dagh Block and the entire Kurdish area of northern Iraq was virtually unexplored until the Kurdish Regional Government issued new exploration contracts in 2007. To the southwest, the supergiant Kirkuk Field was among the first discoveries in Iraq. Kirkuk and other major fields such as Bai Hassn, Jambur and Kor Mor produce mainly from Tertiary reservoirs; however, to the northeast these formations lose prospectivity as intense deformation has caused the Tertiary formations to be exposed on the land surface. This deformation has resulted in highly fractureds subsurface structures formed by the deeper Mesozoic formations. As a result, the main reservoirs at TaqTaq and Miran are formed by the Cretaceous Shiranish, Kometan and Qamchuqa Formations.
Extrapolation from nearby oil fields, recent discoveries and the seismic interpretations indicate seven potential reservoirs on the Qara Dagh structure. Fractured carbonates in the Cretaceous Shiranish, Kometan and Qamchuqa/Balambo Formations are prospective under the Kolosh shale seal and above a rich oil source rock in the Sarmord Formation. The Jurassic Alan, Mus and Butmah Formations are sealed by upper Jurassic anhydrite and charged by the Sargelu Shale which forms a regional oil source rock. Few wells have been drilled into the Triassic; however, the Kurra Chine is productive elsewhere in Iraq and could contain oil or liquids-rich gas at Qara Dagh.
The Company believes that proximity of the Qara Dagh Block to recent discoveries at TaqTaq and Miran and the presence of oil seepages on the block make the Qara Dagh structure a low risk prospect with the potential for the discovery of large oil reserves.
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