Ascent has received an independent report corroborating the highly prospective nature of the Petisovci-Lovaszi project area, with P50 estimates of gas-in-place of 412 Bcf (11.7 Bm3; 68.7 MMboe). The report from RPS Energy Group plc ('RPS'), a leading international oil and gas reserve assessor, also declared the corresponding P90 and P10 estimates are 200 Bcf and 834 Bcf with a mean of 478 Bcf.
The Petisovci/Lovaszi Project Area covers some 200 sq km and straddles the Hungarian-Slovenian border. The Company believes that this project, with its high levels of recoverable gas, has the potential to be the largest asset in its portfolio and believes this to be a unique project for onshore Europe, due to its scale and risk reward profile. Importantly for development, the area is serviced by excellent infrastructure and has existing gas pipeline connections and the regional gas price is strong, with a current price of $9.00 per Mscf being achieved in Hungary.
Ascent in the last year has acquired 3-D seismic surveys that cover the entire area. The data has been processed and interpreted and the resulting structural interpretation of the main targets is significantly different from the previous geological model. The structures have two sets of reservoirs, the shallower Pontian and the deeper Miocene, The Miocene reservoirs are Ascent's development objective as the shallow reservoirs were extensively developed during the 1960s and are considered to be almost fully depleted.
The RPS report considers mainly the Miocene reservoirs that contain gas in low permeability sandstones found at a moderate depth of between 2,000 m and 3,000 m. Some previous production was initiated from these tight gas reservoirs in the 1960s both in Hungary and in Slovenia however total production was less than 10 Bcf. Tight gas is considered as the first category of unconventional resources that also includes shale gas, shale oil and coalbed methane. These unconventional resources require enhanced productivity techniques to enable them to produce at commercially viable rates. Horizontal or extended reach drilling and hydraulic fracture stimulation or a combination of these technologies is generally used. Stimulation methodology has been extensively developed in the last 20 years with the results of the improvements dramatically changing the gas markets, especially in North America where production from unconventional sources has increased from 16% to 48% in the last 20 years. Recovery factors for tight gas reserves generally exceed 50% of the gas-in-place and further work is underway by RPS to accurately forecast the recovery factors that can be expected for the Miocene reservoirs.
The Pg-11 well is ready to drill with commencement targeted in November 2010. This well has a number of important objectives and the evaluation program for the well, which includes core sampling and state-of-the-art wireline logging, is designed to collect sufficient data for stimulation design, as well as calibration of the 3-D seismic to optimize the geological modeling over the entire project area. Ascent's Board is considering the best means to maximize shareholder exposure to the substantial potential upside of the project, whilst mitigating the risks associated with undertaking the work program on a sole risk basis.
Ascent's Managing Director Jeremy Eng said, "The RPS report underpins our prognosis of the substantial gas potential at Petisovci-Lovaszi and with a P50 gas-in-place of 412 Bcf, vindicates our decision to invest in the 3-D seismic which was funded entirely by Ascent. The future development of this project has become the first priority for Ascent. We now look forward to receiving the information from the Pg-11 well which, apart from facilitating the detailed planning for the development of these reserves, is also expected to become our first production well in Slovenia."
In the Petisovci Lovaszi project area, Ascent has a 50% interest in the 90.1 sq km project area in Hungary with partner MOL Hungarian Oil and Gas plc. In Slovenia, Ascent's partners are Geoenergo with a 25% interest and Stratic Energy Corporation ('Stratic'). In 61.5 sq km of the 97 sq km concession, Ascent's interest is 75% and in the other 35.5 sq km which contains the Petisovci structure, Ascent has a 75% interest in the shallow reservoirs and a 26.25% interest in the deep reservoirs, Stratic is under currently sole risk provisions for the 3-D seismic and the Pg-11 well.
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