Mr. Jim McFarland reports
VALEURA ANNOUNCES CONVERSION OF THE 100% OWNED BANARLI LICENCE IN TURKEY TO TWO NEW LICENCES WITH A 13% LARGER AREA AND COMPLETION OF NEW 3-D SEISMIC
The General Directorate of Petroleum Affairs of the Republic of Turkey has approved Valeura Energy Inc.'s application to convert its 100-per-cent-owned Banarli exploration licence 5104 in the Thrace basin to the licensing terms under Turkey's new petroleum law adopted on June 30, 2013. As a result, the Banarli licence acquired in April, 2013, has been converted to two new contiguous exploration licences, adapted to a new grid system, with a total area of 542 square kilometres or 133,840 acres, representing a 13-per-cent increase in the area of the original single licence.
The corporation is also pleased to advise that it completed the acquisition phase of a new 3-D seismic survey at Banarli. The seismic covers an area of 152 square kilometres, which satisfy the seismic requirement in the initial term of the new licences. The total all-in cost to acquire, process and interpret the seismic is estimated at $5.0-million. Processing and interpretation of the seismic are under way and should be completed by early September to position potential drilling at Banarli as early as the fourth quarter of 2015, contingent on the 3-D seismic results and the corporation's cash position at the time. Under the new licensing terms, an initial commitment well will need to be spudded by June 26, 2016.
"We are pleased that the Banarli licence has been successfully converted to new terms and the licence evaluation program is proceeding as planned with completion of the 3-D seismic program as a key first step," said Jim McFarland, president and chief executive officer. "We believe that Banarli offers significant exploration upside potential both in terms of the extension of the successful conventional gas and unconventional tight gas plays under development just south of Banarli on our joint venture lands, and in a potential basin-centred gas play at depths below about 2,500 metres."
Banarli licensing terms
As a result of the successful conversion process, the initial five-year term of the original Banarli licence has been extended by more than two years to June 27, 2020. During the initial five-year term, Valeura will be required to complete, in aggregate on the two licences, 152 square kilometres of 3-D seismic and three wells, including a 2,000-metre well in each of year one and year two and a 3,800-metre well in year four. The total assigned value to this program is $9.15-million (U.S.), and an associated 2-per-cent bond is in the process of being submitted to the GDPA.
Under the new petroleum law, the initial five-year term of an exploration licence can potentially be extended by application for two additional two-year periods, supported by an additional work program, for a total term of nine years. If a discovery is made on a licence by the end of the nine-year period, the term can be extended for a further two-year appraisal period to a total term of 11 years. Throughout this 11-year period, the corporation may apply to convert discovery areas to production leases, typically with a 20-year term extendable to 40 years. In a change from the previous petroleum law, up to 100 per cent of the licence area can potentially be converted to a production lease if technically justified, for example if a more pervasive unconventional resource play has been proven by drilling.
Planned Banarli exploration drilling
It is expected that an initial exploration well at Banarli would target conventional gas in the Osmancik formation and the top of the Mezardere formation to a depth of approximately 2,500 metres. The corporation has mapped more than 15 exploration structural leads at Banarli based on 92 kilometres of 2-D seismic acquired by the corporation in 2013 and more than 300 kilometres of vintage 2-D seismic over the licence. The current 3-D seismic program targets these leads and is designed to potentially mature and prioritize these into drill-ready prospects.
The cost to drill, complete and test an initial exploration well at Banarli is estimated at $2.1-million and is included on a contingent basis in the 2015 budget. Additional funds of $1.2-million are also included for a flow line to tie in the well, contingent on drilling success and the ability to negotiate a transportation and marketing arrangement to tie in production. Total 2015 capital expenditures at Banarli for the shallow gas play are budgeted at approximately $9.0-million, including $5.0-million for the 3-D seismic. The program for Banarli will be firmed up after the 3-D seismic interpretation is completed.
Valeura is continuing its process to seek a joint venture partner to participate in financing an exploration drilling program in the deeper horizons at Banarli below approximately 2,500 metres, targeting a potential basin-centred gas play.
With respect to other 100-per-cent-owed Valeura exploration licences in the Thrace basin, the corporation has submitted an application to the GDPA to relinquish the small Copkoy exploration licence to the west of the core exploration and production area to concentrate its drilling program on higher-priority Valeura and joint venture licences and leases. The enlarged Banarli licence area offsets approximately 74 per cent of the area expected to be relinquished in the Copkoy licence.
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