Nautical Petroleum Gets 'Kraken'

Nautical Petroleum announced that a Rig Agreement for the next drilling activity on the Kraken discovery in UKCS block 9/2b has been signed.

The drilling will be performed during the summer 2010 in the south west of the accumulation, using the Ocean Nomad semisubmersible rig. The activity will consist of both an appraisal well and an exploration well, plus testing. 

The appraisal well will assess the southern extent of the existing hydrocarbon accumulation confirmed by the successful 9/2-1A and 9/2b-2 wells. The key purpose of this well will be to recover cores and obtain fluid samples, with the aim of collecting data which will be used to optimize the planned field development. The location of this well is within the mapped structural closure, an anomaly shown on the Controlled Source Electro Magnetic (CSEM) survey and an area of high amplitude on the seismic. 

An exploration well, to the west of the appraisal well, will investigate three potential reservoirs, namely Heimdal III, a deeper Heimdal I and older sands, and targets gross best estimate prospective resources of 114mmbo in the Heimdal III and I reservoirs. 

In anticipation of a successful result from the appraisal well, development planning and concept selection studies are already underway, with the aim of submitting a Field Development Plan to the Government by end 2010. Our current plan foresees a phased development initially focusing on the core area, with anticipation of first oil by end 2012. We are currently researching the availability of existing development equipment to enable Kraken to be brought onstream expeditiously. 

Canamens Energy North Sea Limited ("Canamens") will not participate in the drilling at this time. As a consequence, our other joint venture partner Celtic Oil Limited ("Celtic") will fund 30% and Nautical will fund 70% of this activity. The provisions of the Joint Operating Agreement (JOA) provide Canamens the opportunity to participate in the development following the completion of the drilling, subject to refunding Nautical's additional costs and paying Nautical a financial uplift. 

Commenting on this announcement Steve Jenkins, Chief Executive Officer of Nautical said, "We're very pleased to have secured the Ocean Nomad and we look forward to this well spudding in the summer. Our considerable study work performed over the last six months has significantly improved the understanding of the subsurface. We are confident that we can now predict the reservoir distribution and hydrocarbon extent with more certainty. 

The signing of the rig agreement ensures that the drilling will occur over the more benign summer weather window and that the development schedule remains on track. Nautical's positive action reflects the technical confidence we have in the well location and our desire to proceed aggressively to afford our shareholders the opportunity to realize the significant value success in this activity will deliver."

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