Entek Awarded GOM Block
Entek Energy Limited announced the Company has received notice from the United States Department of the Interior -- Minerals Management Service, that its bid offered March 19, 2008 for Main Pass Area, South & East Addition, Block 252 (MP-252), has been accepted.
MP-252, located in 77 metres (253 feet) of water, contains a proven, but incompletely produced natural gas reservoir (El Capitan Prospect) at the relatively shallow depth of approximately 2,438 metres (8,000 feet), plus a second proven natural gas reservoir, but in this case never before developed, at approximately 2,103 metres (6,900 feet).
The Company's geological and geophysical consultant estimates recoverable proved, probable, and possible remaining reserves in MP-252 at approximately 45 BCFG from the incompletely produced reservoir, with a further 6.9 BCFG in the shallower undeveloped reservoir.
Entek is in the process of appointing a respected international petroleum reservoir evaluation consulting firm to evaluate MP-252 and independently certify the reserves quantities. This work is expected to be completed within 30 days.
Entek's Working Interest in MP-252 is currently 75% and therefore its portion of any and all future costs of drilling and production will be 75% unless the Company decides to modify its interest. Previous successful field drilling allows for a knowledgeable risk assessment for new drilling of MP-252 and the Company will incorporate this information into drilling and development decisions.
In-ground developed proven gas reserves in the Gulf of Mexico Outer Continental Shelf have traded in the recent past in the range US$2,500,000 to US$3,500,000 per BCFG.
The incompletely produced reservoir in MP-252 will require compression as part of any future redevelopment. Certified reserves quantities will therefore likely be valued in the lower half of this trading range.
Natural Gas spot prices at the Henry Hub transhipment point were traded at US$ 10.56 per MMBtu on April 22nd, 2008 and averages US$9,967 per MMCFG for the month of April 2008 to date.
It is planned that a high inclination well to approximately 2,438 metres (8,000 feet) will be drilled to retap the incompletely produced reservoir. Initial costs of this well are assessed at US$6 million (Entek share US$4.5 million should the Company retain a 75% Working Interest). The Company's current revenue of in excess of A$550,000 per calendar month is anticipated to provide sufficient working capital to meet this obligation. Entek's full economic evaluation of the reserves is based upon a two well development, the second well designed to accelerate production of the incompletely produced reservoir and also tap the proven but unproduced reservoir. Production would be tied back to existing production facilities nearby.
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