DNO updates exploration, drilling activities
Offshore staff
DNO has entered into a binding letter of intent with Elixir Petroleum Ltd. to take a 60% working interest and operatorship in block 211/22B in the northern North Sea of the UK continental shelf.
DNO will secure a 60% working interest and operatorship in block 211/22B by funding 92.5% of the costs of drilling the exploration well on the Jaguar Prospect in 2006. Elixir will retain a final 40% working interest in the block.
Block 211/22B hosts a large upper Jurassic prospect named Jaguar, which if hydrocarbon bearing, has oil reserve potential of several hundred million barrels.
"We are pleased with this new transaction, which is in line with DNO's strategy of adding new reserves at low costs through smart exploration," says managing director of DNO, Helge Eide.
Through this transaction, DNO will be re-entering the UKCS. The company will sign a formal farm in agreement by late June. The transaction is subject to all necessary approvals by UK authorities.
In addition, DNO has updated its Basement and Kohlan oil discoveries in the Nabrajah field off Yemen. The company estimates the proven and probable reserves in the field are 68 MMbbl. This will increase DNO's total proven plus probable reserves to 75 MMbbl.
The Yemen authorities have approved a 932 sq km development area in block 43.
As previously reported, Nabrajah No. 5 confirmed the presence of oil in both the Basement and the Kohlan formations. The Basement interval produced 5,800 b/d and the Kohlan produced 4,180 b/d during production testing. DNO has suspended Nabrajah No. 5 for future use as a Basement and Kohlan oil producer.
The Basement and Kohlan oil discoveries in Nabrajah No. 5 are different hydrocarbon systems than the shallower Qishn reservoir, which until now has formed the reserve basis for the Nabrajah development. Based on DNO's first evaluation, the oil in the Basement and Kohlan intervals in Nabrajah No. 5 have increased the combined proven and probable reserves in Kishn, Kohlan, and Basement to 68 MMbbl.
As a consequence of the Basement and Kohlan oil discoveries, the block 43 partners have revised the drilling schedule. Nabrajah No. 6, which the operator is currently drilling, is intended as a Qishn water injector for reservoir pressure maintenance. Thereafter, DNO will begin a Basement appraisal program, which could include the drilling of up to four additional Basement wells in 2005.
The Basement is producing oil in both Total's block 10 and the Canadian Nexen Petroleum Yemen block 14, and has become an important target for exploration drilling in the Masila basin. The recent Basement oil discovery in Nabrajah No. 5 supports the probability of significant oil potential in block 43, which could be developed cost efficiently through the Nabrajah production facilities.
Following the Basement oil discovery in block 43, DNO will increase its focus on Basement prospects in its other licenses in Yemen, and the company has already launched a study to identify Basement drilling targets in block 32.
The first stage of the Nabrajah field development is nearing completion and DNO expects first oil at the end of June. The initial production capacity will be 5,000 b/d, increasing to 15,000 b/d in August.
As previously reported, DNO has arranged some of the initial production facilities through lease contracts to accelerate production start-up and to ensure an optimized design of the permanent facilities. As a consequence of the revised oil reserves reported above, DNO will increase capacity of the production facilities stepwise to 50,000 b/d, and expects full production capacity by 4Q 2006.
The block 43 partners are operator DNO ASA 56.67%, Oil Search (Yemen) Ltd. 28.33%, and The Yemen Co. 15%.
05/24/05