Dana Petroleum announced two new oil discoveries in Egypt and gave an update on its 2010 drilling program.
Firstly, a successful exploration well in the North Zeit Bay production sharing contract area, onshore Gulf of Suez in Egypt, where Dana holds a 100% interest. The Dana operated Lorcan-1x well was drilled to a total depth ("TD") of 7,500 feet, encountering good quality oil bearing sands in the Kareem formation in line with Dana's prognosis prior to drilling.
During the drill stem test, the well flowed strongly with high downhole pressures delivering flow rates of up to 4,714 barrels of oil per day. The well's flow rate was restricted by the tubing configuration and the requirements to transport the produced oil from the location by road tanker to avoid flaring. Dana is already in discussion with the Egyptian General Petroleum Corporation ("EGPC") in order to achieve early production from the Lorcan oil field. The rig is being retained by Dana and has been moved to drill the Fin-1x exploration well, which has now spudded. The Fin-1x well is expected to take approximately 45 days to drill with the key aim being to prove up further oil reserves on trend with the Lorcan oil discovery.
Secondly, Dana reported the successful drilling and testing of the Fayoum-2x well in the East Beni Suef concession, onshore Egypt (Dana 50%). Oil was discovered in the Upper Bahariya formation, with net pay of 64 feet, and in the A/R G-20 sands, with net pay of 10 feet. Test data indicates that the well should be capable of flowing at oil rates of approximately 600 boepd. The Operator is currently progressing plans to bring this new discovery on stream.
Elsewhere in Egypt, drilling operations have now been completed on the Bamboo well, offshore Nile Delta (Dana 50%) having reached the planned TD of approximately 12,533 feet. Significant good quality sands were encountered in the primary target, however petrophysical interpretation of the logs acquired across the reservoir interval indicates that these sands are water bearing. A 16 feet interval of sands with gas shows has been encountered in the Kafer el Sheikh formation which requires a more detailed sub surface interpretation. The Bamboo well has been a challenging high pressure operation. Dana and GdF Suez (Operator) have successfully and safely completed the drilling of this well and are now putting in place a temporary abandonment thus leaving the potential option to re-enter the well in the future.
Drilling operations have also been completed on the Monkwell well, 42/29a-10, in the UK Southern North Sea, having reached planned TD of 9,473 feet. The target Lower Leman Sandstone reservoir was encountered some 200 feet deep to prognosis. Therefore the sand came in below the area's gas-water contact. This result indicates that the Monkwell gas discovery is too small to be economic. The rig will now move to the Tolmount location and this Eon-Ruhrgas operated well is expected to spud shortly.
Commenting on the news, Tom Cross, Dana's Chief Executive said, "The Lorcan oil discovery is an excellent result which has exceeded Dana's expectations. The very strong flow rates, combined with its onshore location and proximity to Dana's East Zeit oil production base, make Lorcan an extremely attractive development opportunity. Dana will seek to bring this oil onstream at the earliest opportunity.
Although the exploration outcomes at Bamboo and Monkwell are disappointing, they do follow Dana's recent exploration successes at Papyrus, in the offshore Nile Delta and at Platypus, in the UK Southern North Sea, both of which have demonstrated robust economic gas developments.
Dana is driving ahead with its extensive 18 well 2010 exploration program and expects to begin drilling the large Anne Marie oil prospect offshore the Faroe Islands within the next month."
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