Cirrus Farmout of Netherlands Blocks Nets Exploration Partner
Cirrus Energy Corporation reported that its wholly owned subsidiary, Cirrus Energy Nederland B.V., has entered into an agreement with TAQA Offshore B.V. ("TAQA") whereby Cirrus will dispose of 50% of its interests in the Q11 and Q14 offshore exploration licenses. The licenses are located about 40 km east of TAQA's P15ACD facilities. The consideration for the disposition takes the form of a farm-in on a two-for-one basis relating to costs of the first exploration well on the acreage which is planned to be drilled on the Q14-Alpha prospect. Any excess of gross well costs exceeding (euro)12.5 million in the event of a dry hole, or (euro)16.5 million if the well is tested, will be funded by the partners according to their post-farmout working interests. Upon closing of the farmout, Cirrus' working interests, post EBN participation, will be 28.5% in block Q11 and 30% in block Q14. Cirrus will remain the operator of both blocks.
The Q14-Alpha prospect is a large fault block interpreted and mapped on 3D seismic data. The main reservoir targets are Triassic-aged Bunter sandstones with secondary reservoir potential in Permian-aged Zechstein and Rotligend sandstones. Cirrus' internal estimate of combined most likely, gross, unrisked, recoverable resource potential in both reservoirs in the Q14-Alpha prospect is 175 bcf. It is expected that the Q14-Alpha prospect will be drilled in late 2008 using the already contracted Noble Lynda Bossler jackup drilling rig at a non-crestal location that, if successful, is expected to establish that commercial development of the primary target is possible. Further drilling would be required to determine the potential of the secondary reservoir and to develop the field.
Cirrus' President, David Taylor, comments, "I am delighted to have TAQA, an established upstream company in The Netherlands, as our exploration partner in these prospective blocks. This arrangement brings benefits to both parties which, for Cirrus, is in line with our stated strategy and reduces our risk capital expenditures while maintaining a material exposure to the substantial value of exploration success."