Toreador Strikes at Akcakoca-4 in the Black Sea

Toreador Resources and its joint venture partners TPAO (the Turkish national oil company) and Stratic Energy Corporation report that the Akcakoca-4 well, located offshore Turkey in the Black Sea, encountered approximately 37 meters (121 feet) of gas-bearing sands in three zones between 1,159 and 1,375 meters (3,083 and 4,502 feet) true vertical depth. The deepest zone, with approximately 13 meters of net pay, tested at a flow rate of 8.6 million cubic feet of gas per day (MMCFD) with a flowing pressure of approximately 630 psi on a 48/64-inch choke. The shallowest zone will be tested later this week.

"The Akcakoca-4 is the eleventh successful well out of thirteen drilled in the South Akcakoca Sub-basin," said Michael J. Fitzgerald, Toreador's Senior Vice President of Exploration and Production, "and further extends the area of known reserves in our project area. We continue to achieve excellent results at the drill bit and in the near future will begin the first gas production ever from the Turkish Black Sea."

After testing the upper zone in the Akcakoca-4 and securing the well, the "Southern Cross" semi-submersible rig will move approximately 2.5 kilometers (1.6 miles) east northeast to drill the third well in its current contract with Toreador, the Guluc-1. The Guluc prospect is on a separate fault block further east along the Akcakoca fault trend with several distinct pods. Once operations are complete on the Guluc-1 the "Southern Cross" will move to Bulgarian waters to begin work for another operator.

South Akcakoca Sub-basin update

In other news from the South Akcakoca Sub-basin project, the Dogu Ayali-1 and -2 wells were completed, tested and tied back to the Dogu Ayazli tripod. The Dogu Ayazli-1 tested at a combined rate of 14.2 MMCFD from two sets of perforations. In the deeper test, approximately 8 MMCFD flowed from a total of 14 meters (46 feet) of perforations between 1,036 and 1,080 meters (3,400 and 3,544 feet) depth on a 36/48-inch choke at a flowing pressure of approximately 1000 psi. The shallower test yielded a flow rate of 6.2 MMCFD from a total of 17 meters (56 feet) of perforations between 757 and 817 meters (2,484 and 2,681 feet) depth on a 36/64-inch choke at a flowing pressure of approximately 810 psi.

The Dogu Ayazli-2, which is being completed as a single completion, flowed approximately 11 MMCFD from 13 meters (43 feet) of perforations between 1,345 and 1,402 meters (4,414 and 4,601 feet) depth on a 48/64-inch choke at a flowing pressure of approximately 745 psi.

With the completion of the Dogu Ayazli wells, the next step in starting first production from the South Akcakoca Sub-basin is the installation of the topsides for the Dogu Ayazli and Akkaya tripods and tie-in to the offshore pipeline system. The topsides are nearly complete at the construction yard in Izmet, Turkey, and should be transported to the South Akcakoca Sub-basin project area in the next few weeks. Testing of the offshore pipeline has been completed and the pipeline buried. Major systems at the onshore production center have been commissioned and are undergoing testing. Production will start from the Akkaya and Dogu Ayazli tripods before installation of the Ayazli tripod, which is still scheduled to be set and installed starting in February.

New Turkish petroleum law passed

Earlier this month, a new petroleum law was approved by the Turkish parliament that has a beneficial impact for Toreador and other exploration and production companies in Turkey. Some of the provisions include:

  • The royalty rate for offshore natural gas production was reduced from 12.5% to a sliding scale that will result in South Akcakoca Sub-basin production being subject to a 3% royalty for the first 3.3 million cubic meters per day (116 MMCFD) of production and 6% royalty up to 8.2 MMCMPD (290 MMCFD);
  • Stamp tax of 0.75% of the value of all service contracts was removed;
  • License terms were extended to eight years offshore and five years onshore for exploration and there is no time limit on production licenses as long as production continues.
  • Restrictions were lifted on the number of licenses allowed any one company, but a bond equal to 2% of the value of the work program must now be placed at the license award;
  • Changes to regulations and restrictions governing offshore operations were made that will reduce costs and simplify the operating environment.

In addition, Toreador is now eligible to recover $50 million of 'registered capital' associated with the original acquisition of Arco Turkey property and can repatriate the capital free of tax.

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