Heritage Encounters Hydrocarbons at Miran Well
Heritage Oil issued its Interim Management Statement for the period from July 1, 2010 to November 17, 2010, in accordance with reporting requirements of the EU Transparency Directive.
- The Miran West-2 well, in the Kurdistan Region of Iraq, has reached a total depth of 4,426 meters
- The well has encountered indications of hydrocarbons from intervals within the Cretaceous, Jurassic and Triassic in excess of 2,500 meters
- Numerous zones for testing have been identified and testing operations have commenced
- Production in Russia averaged 516 bopd for the third quarter of 2010
- As at September 30, 2010, Heritage's cash position was $614 million, excluding reserved amounts related to the tax dispute in Uganda
Kurdistan Region of Iraq
The Miran West-2 well has reached a total depth of 4,426 meters. The well encountered indications of hydrocarbons from intervals within the Cretaceous, Jurassic and Triassic in excess of 2,500 meters. A number of zones within these intervals have been identified for testing in both the deeper exploration targets and the initial appraisal objective in the Cretaceous. Testing operations have commenced and a further update will be provided on completion of these tests, expected within the next couple of months.
The acquisition of approximately 550 square kilometers of 3D seismic over the Miran Block has recently commenced. This, along with an extensive fieldwork study that began in October 2010, will help establish future drilling locations to exploit the reservoirs' fracture networks.
Heritage is looking to contract at least one rig to continue the drilling program across the Block in 2011 which will include an exploration well on the Miran East structure. Heritage has operated in Kurdistan for approximately 700 days without any lost time or environmental incidents.
Work programs are progressing across the remainder of Heritage's exploration portfolio assets. Acquisition of 300 square kilometers of 3D seismic is due to begin shortly on the offshore Latham Block in Tanzania and acquisition of approximately 800 kilometers of 2D seismic is scheduled to commence in Block 11 in Mali during December. Acquisition and processing of this data will help to establish locations for drilling in the second half of 2011. In addition, Heritage is planning the acquisition of 1,000 kilometers of seismic in Malta for early 2011. Drilling will commence on the Zamzama North Block, Pakistan, when the flood waters subside which is anticipated to be during the first half of 2011.
Production for the third quarter of 2010 averaged 516 bopd, an increase of approximately 22% compared to the third quarter of 2009. Further well optimization work is planned for late this year and work is progressing on preparations for further development drilling. The drilling of a horizontal well is planned to commence during the first quarter of 2011 to test the viability of horizontal wells for field development.
As at September 30, 2010, Heritage had a cash position of $614 million, excluding reserved amounts relating to the tax dispute in Uganda. Following completion of the sale of the Ugandan working interests on July 26, 2010, Heritage deposited $121.5 million with the Uganda Revenue Authority and placed $283.5 million in escrow.
Heritage's strong balance sheet will facilitate acceleration of exploration, appraisal and development programs in its asset portfolio and will support the ongoing initiative to seek attractive terms for participation in other opportunities to generate further value for shareholders. Heritage therefore continues to actively appraise opportunities to enhance its asset portfolio.
Tony Buckingham, Chief Executive Officer, commented, "We are encouraged by our progress in Kurdistan where we have encountered hydrocarbon shows in the initial Cretaceous objectives and in the deeper exploration targets in the Miran West-2 well. As a consequence, we have commenced extensive testing of target formations and expedited a large 3D seismic programme across the Block. We look forward to completing our Miran testing program."
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