Transeuro Energy Corp.
TSX VENTURE : TSU
OSLO STOCK EXCHANGE : TSU

Transeuro Energy Corp.

November 29, 2010 06:01 ET

Transeuro Energy Corp.: Ukraine Drilling Rig Mobilisation

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 29, 2010) - Transeuro Energy Corp. ("Transeuro" or the "Company") (TSX VENTURE:TSU)(OSLO:TSU) issues a general update of its Ukraine activities as the Dafora Drilling 'Rig 2' is mobilized to resume drilling operations on the Karl-101 well. Drilling is expected to commence before the end of December. Smith Production Technologies, a subsidiary of Integra Group will provide Integrated Project Management services to engineer and supervise the operations.

Project Summary

  • The Karl-101 well was initially drilled in 2008/07 and data was collected on the target reservoirs but a well control incident lead to the reservoir section being abandoned and the well was suspended in November 2008 at a depth of 2750m. Over 100 meters of net gas bearing reservoir was identified from logs and gas samples from 2800 – 3500m.
  • A sidetrack is required to re-drill the reservoir section, estimated at 30 days to drill and 20 days to test the first interval. Future cost are estimated at US$ 4.5 million ($3.4 million for drilling and $1.1 million for testing).
  • The Karlavskoye field is proven by 9 old wells, that all produced gas and condensate. Third party estimates suggest nearly 0.5 Tcf of gas in place with additional condensate.
  • The Company is expecting to test between 1 and 5 separate intervals and is targeting 5 mmcf/d per interval and a combined result of 20 mmcf/d and 1000 barrels per day of condensate (approximately 4500 boepd).

Background to Ukraine Activities

Transeuro Energy entered the Ukraine in 2002 with the strategy of pursuing large assets in bypassed areas where there was little industry competition. Since then the Company has established a strong relationship with the state company 'Nak Nadra Ukrainy' and its regional operating subsidiary 'Crymgeology', and has retained its agreements to develop the Karlavskoye, Krasnapolianskoye and Povorotnoye licenses. Transeuro holds Joint Activity Agreements (JAA's) with Crymgeologia to provide the investment and technical knowledge to develop the fields in return for a 72% share of the profits. The assets are all 'discovered fields' and have many old wells drilled in the 1960's and 1970's which produced hydrocarbons (gas and condensate) to surface, thereby removing the exploration risks. None of the wells has ever been placed on production.

The Karlavskoye Field

The Karlavskoye field is the principal asset and is located in West Crimea. The main reservoirs were discovered in 1966 and 9 wells have all produced gas and condensate to surface from multiple horizons in the Upper Cretaceous reservoirs from 2700m – 3500m. Wells have produced at commercial rates from individual horizons: 3.5 mmcf/d (600 boepd) from the C14 reservoir in well 12, 4.2 mmcf/d (720 boepd) from the C15 reservoir in well 14 and 5.3 mmcf/d (900 boepd) from the C12 reservoir in well 8. The seismic and well data suggest the field is approximately 10 km by 3km in size. Independent third party 'Gas In Place' has been estimated by Fekete Associates Inc. to be in the range of 160 – 854 Bcf (27-145 million boe) with a mean of 472 Bcf (80 million boe). Condensate yield is expected to be in the range of 40-60 bbls/mmcf (and is not included in the boe figures). The full reserves report is available at www.transeuroenegy.com.

The main 18 inch export pipeline containing gas from the offshore fields runs across the license and is approximately 400m from the Karl-101 location. The current development scheme is to tie into the export line downstream of the adjacent gas storage field and plant (10km distant), and the company intends to study the option to tie directly into the line near the well, which is upstream of the plant.

The Karl-101 well

In January 2007 the company commenced drilling the Karl-101 well using the Uralmash 3D Russian rig provided by Crymgeologia (that is now replaced by the Dafora Rig 2 for the sidetrack operations). The target reservoirs were drilled in early 2008 with logs and gas samples acquired down to 3477m, indicating a most likely net pay of 100m. Some of the known reservoirs seen in the old wells are located slightly deeper and were not logged in Karl-101, so the total net pay is expected to increase to around 120m. Gas samples were recovered to surface from 3 intervals and laboratory analysis confirmed the expected gas and condensate. Gas and condensate was also flared to surface during these tests. In June 2008, after drilling through the target Cretaceous reservoirs, and while drilling the final 10m section, a high pressure water zone was encountered. The well control situation stretched the rig capabilities and the supply chain and ultimately in November 2008 the reservoir section was abandoned with the drill pipe cemented in place across the reservoir sections and the well was suspended at 2750m.

Resumption of Operations

The Company will now resume operations to re-enter the well and to sidetrack from 2750m to 3500m and to test up to 5 intervals, depending on results. During the last few years a number of other international operators have been active in Ukraine and have imported modern drilling rigs. Transeuro has retained Dafora Drilling as the rig contractor and Integra Group as the IPM provider, both internationally recognized service companies, to help ensure that the sidetrack operations will be performed quickly, efficiently and on budget. The preliminary target is now 30 days for drilling and 20 days to test the first interval. The Company has estimated a total cost for the sidetrack of $5.2 million, with mobilisation and site costs already paid, the future costs are estimated at $4.5 million, split as $3.4 million for drilling, logging and running 7" casing, and $1.1 million for testing and stimulation operation).

Further information on these companies and the Dafora rig (type F400-DEC) can be found at : (http://www.dafora.ro/daforadrilling/index.php?care=2&lang=en) and (http://www.integra.ru/eng/business/drilling_service/ipm/)

Test Objectives

Given the evidence of rates in the range of 3-5 mmcf/d from the old wells, Transeuro has set an average target of 5 mmcf/d from each of the reservoir intervals and a total of 20mmcf/d overall from the well. The condensate yield from the various reservoirs is not well documented and this is a key deliverable from the tests, but a cumulative condensate rate of 1000 barrels per day from all intervals is targeted.

Transeuro is involved in the acquisition of petroleum and natural gas rights, the exploration for, and development and production of crude oil, condensate and natural gas. The Company's properties are located in Canada, Armenia, and Ukraine. In addition, the Company owns shares in Eaglewood and holds a back-in option to their exploration licenses in Papua New Guinea.

On behalf of the Board of Directors

Aage Thoen, Chairman 

The statements contained in this release that are not historical facts are forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from the targeted results. The Company relies upon litigation protection for forward looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) nor the Oslo Bors accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Transeuro Energy Corp.
    David Parry
    SVP
    +1 604 681 3939
    or
    Transeuro Energy Corp.
    Karen Jenssen
    IR
    +47 91 729787
    www.transeuroenegy.com