Rocksource sees potential for CSEM in Cauvery basin

Offshore staff

OSLO -- Rocksource ASA has issued an update on its licensing negotiations offshore southeast India.

The company has held meetings and discussions with joint venture partner and operator ONGC over the Phase 1 work program for exploration block CY-DWN-2001/1 in the Cauvery basin. Rocksource expects ONGC to make a final recommendation on a third well location by mid-year, which would allow drilling to start in the final quarter of this year.

Rocksource intends to sign the Production Sharing Contract once the government of India grants a suitable extension to the Phase 1 period, and following the completion of other commercial negotiations with ONGC.

So far two exploratory wells have been drilled on the block, both failing to discover commercial hydrocarbons. But Rocksource points out that neither well tested the prospect associated with the primary positive electromagnetic (CSEM) anomaly which it recently interpreted.

Rocksource believes there is significant potential in the block and that application of CSEM technology is critical to identifying and de-risking a significant component of this potential.

Rocksource estimates its net costs for the full Phase 1 work program at $20 million. The company is discussing with ONGC the extent of its liability for costs relating to the first and second exploration wells, which were drilled prior to government of India approval of the assignment of a participating interest in the block to Rocksource, and without Rocksource’s consent.

ONGC is the block operator (45%) with Oil India (20%) and Brazilian state oil company Petrobras (25%) as co-venturers along with Rocksource (10%), on final signature of the PSC.

4/19/2010