Bengal: Cauvery Exploration Work Set To Begin

Bengal Energy announced that the Government of the State of Tamil Nadu has granted a formal Petroleum Exploration License on 234,000 acres in India's Cauvery Basin to a consortium including Bengal. Bengal has a 30% interest in the onshore block CY-ONN-2005/1 while the operator, GAIL (India) Limited, holds a 40% interest and the Gujarat State Petroleum Corporation holds the remaining 30% interest. The consortium signed a Production Sharing Contract with the Government of India in December 2008. Exploration work is expected to begin immediately.

In the first year of the four-year agreement, Bengal and its partners plan to undertake an aggressive exploration campaign consisting initially of 2,300 km of airborne magnetometry and reprocessing 1,700 km of 2D seismic data. Subsequent design and acquisition of a large area 3D seismic program will follow. Exploratory drilling targets have already been identified from a variety of different play types at drilling depths ranging from 500 to 2,000 meters. Two untested basement highlands cover nearly one-third of the block. These highlands are believed prospective for granite wash oil targets, an established play type in the Cauvery Basin. The existing and additional new exploration targets are anticipated to be mature enough for drilling beginning in 2011.

The Indian oil and gas regulatory body, The Directorate General of Hydrocarbons, has reported two new oil discoveries immediately adjacent and northeast of the Cauvery block CY-ONN-2005/1. Such recent discoveries highlight the potential of Bengal's acreage.

In addition to CY-ONN-2005/1, Bengal was provisionally awarded 340,000 acres on block CY-OSN-2009/1 in the shallow offshore area of the southern Cauvery Basin in October 2009. Bengal expects to execute a PSC with the GOI on this block in the next four weeks, at which time exploration activity is expected to commence. The Cauvery Basin is an active producing basin in the southern part of the east coast of India. The basin covers approximately 250,000 square kilometers and has 28 producing oil and gas fields.

"We look forward to working with strong local partners as we apply our technical and operational expertise in India's proven Cauvery Basin," said Bradley Johnson, Chief Executive Officer of Bengal.