International Sovereign Energy Inks Deal for Toot Oilfield

International Sovereign Energy

International Sovereign Energy has signed a Memorandum of Agreement with Oil and Gas Development Company Limited, the national oil company of Pakistan, for the exploitation of the upper carbonate zones in the Toot oil field located in the Potwar region, Punjab Province, which is near the capital city of Islamabad.

The Toot area is one of the oldest oil producing regions in Pakistan with the first well being drilled in 1964. The Toot field is accessible by road and the concession area is 122.67 sq. km. All facilities including a pipeline to the refinery are in place. The field is located on an east-west trending surface anticline with light oil being produced from the sands of the Datta Formation at a depth of 4,500 meters. Light oil potential exists in an uphole fractured Carbonate Paleocene and Eocene sequence (4,150 meters) divided into the Sakesar, Patala and Chorgali Formations. A total of 17 wells were successfully drilled between 1964 and 1986 in the Datta Formation with production peaking at 2400 bopd.

The Company will have the right to develop the Toot oil field upper carbonates on a farm-in basis on the following terms;

  • Stage 1. In conjunction with OGDCL conduct a geological, geophysical and petrophysical study of the Toot Paleocene and Eocene carbonates plus undertake a fracture analysis of other fields in the area that have analogous characteristics to the Toot carbonate zones. On completion of Stage 1, the Company and OGDCL may enter into a Farm-In Agreement that will incorporate the MOA terms.

  • Stage 2. Based on favorable results from the Stage 1 analysis, the Company may elect to re-enter existing well bores to evaluate the prospective horizons or move directly to Stage 3.

  • Stage 3. Based on the results of Stage 1 and/or Stage 2, conduct a drilling program to exploit at least one of the three prospective carbonate horizons.

  • On proceeding beyond Stage 1, the Company will assume operatorship of the Toot field. OGDCL will retain any net revenues associated with production from the Datta Formation. The Company shall receive 80% and OGDCL shall receive 20% of the project net revenues after deduction of all non-capital expenses until the Company recovers 100% of its capital costs. Thereafter, the net distributions shall be 70% to the Company and 30% to OGDCL.

    An analogous field located in the same region came on production in 1990 and over a ten year period produced in excess of 12 million barrels of light oil and 11 bcf of gas from two wells that continue to produce today. The Company plans to commence the initial Stage 1 field study during Quarter 1, 2005.