Bridge Resources Acquires Six UK Central North Sea Blocks
Bridge Resources has executed an arm's-length definitive agreement to acquire all the shares of Iceni Oil and Gas Limited, a private UK company. The Iceni assets include six blocks in the Central North Sea oil area covering 894 sq km (221,000 acres). Five of the six blocks have existing 3D seismic coverage.
Bridge is acquiring a 100% interest in Blocks 14/15-b, 15/11-b, 14/24-a, 16/11-b, 16/16-b and 20/20, all of which are located in the Moray Firth Basin in proven Paleocene and Jurassic producing fairways with historic and recent major discoveries. Oil shows have been recorded in a number of previous wells on the blocks and the historical well data will be used to calibrate the existing seismic to identify drilling locations.
Two of the acquired blocks are held under a 23rd Round license that requires a one well drilling election prior to 22 December 2007 with the well to be drilled by 22 December 2009. The remaining four blocks were acquired by Iceni in the 24th Round and require drilling elections for three wells by 1 April 2009 with drilling to be completed by 1 April 2011.
"This is a significant strategic move for Bridge to diversify into opportunities outside the Southern North Sea gas area. Bridge was targeting the Central North Sea shallow oil area for expansion and the prospective holdings strategically assembled by Iceni complement Bridge's low risk Southern North Sea gas prospect portfolio" states Ed Davies, President and CEO.
Under the agreement, Bridge will acquire all of the issued and outstanding shares of Iceni in exchange for 4,000,000 common shares of Bridge. In addition, Bridge will issue rights to Iceni to acquire another 1,000,000 shares of Bridge, with such rights exercisable if by 31 December 2007, the common shares of Bridge on the TSX Venture Exchange have not traded at a threshold closing price for any interim ten consecutive trading days. The proposed acquisition is subject to the approval of the TSX Venture Exchange and concurrence of the UK Secretary of State.
In the Southern North Sea, Bridge continues to prepare for planned development drilling in Q1 2008 at its 100% working interest Durango gas-condensate project. As announced on 10 July 2007, Bridge has contracted the AGR Peak-operated Ensco 100 jack-up rig for two drilling slots comprising the Durango development well and an exploratory well.
The Durango optimal plan of development comprises a single horizontal well tied back to the Perenco-operated Waveney platform, 14.3 kilometers northeast. Gas from Waveney is transported through the LAPS pipeline to the Bacton onshore terminal. Waveney has sufficient spare capacity to handle the production level expected from the Durango development.
Reservoir modeling studies by Malkewicz Hueni Associates of Golden, Colorado for the horizontal well indicate P50 contingent resources of 42.4 bcfe, closely comparable to the P50 of 40.5 bcfe calculated previously by RPS, the UK engineering consultancy group. A plateau production rate of 30 million cubic feet and 1,000 barrels condensate per day is planned, commencing Q4 2008. Estimated cost for the development well is $30,000,000 with the overall development cost to be equity and debt financed.
Contingent Resources are those quantities of oil and gas estimated on a given date to be potentially recoverable from known accumulations but are not currently economic. The Durango Contingent Resources are Contingent Resources rather than reserves until a Plan of Development is approved by UK Department for Business, Enterprise and Regulatory Reform allowing a declaration of commerciality.
Commenting on the upcoming drill program, Ed Davies said, "We look forward to starting off our North Sea drilling with the development well at Durango. Our corporate strategy is to establish strong cash flow early in our life-cycle and to direct that cash flow back into exploration as we seek to grow the company through the drill-bit. We have identified a broad portfolio of exploration targets on our existing blocks and we expect to add to that portfolio with the Iceni acquisition."
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