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Petromanas provides update on Albanian activities

CALGARY,ALBERTA -- Petromanas Energy provided an update on its drilling and testing activities on Blocks 2-3, in which it holds a 25% working interest and is the Operator with Shell holding the remaining 75% interest, and its discussions with the Albanian government with respect to the Blocks D-E Production Sharing Contract (“PSC”), in which the company holds a 100% working interest.

The Molisht-1 well has been drilled to a depth of approximately 3,270 m. The company logged the upper carbonate zone and has run and cemented the intermediate casing to this depth. This casing point is below the Berati fault, which the company believes caused stability issues during the drilling of the Shpirag-2 well. Once drilling resumes, Petromanas expects to drill the well to a total depth of approximately 5,500 m.

Following the completion of a 30-day pressure build-up at Shpirag-2, the company pulled data recorders from the hole and sent the acquired information for further analysis by a third party that specializes in the interpretation of well test data. Reservoir pressure extrapolated from the build-up indicates the reservoir is over-pressured, assuming an oil column of at least 800 m, as stated in a previous release. Given the relatively short three-day test, limited by on site tankage, production and pressures did not fully stabilize. Management believes that a longer flow test would be beneficial in estimating the long term productivity of the well. As a result of the instability issues experienced while drilling the Shpirag-2 well, open hole logs were not run as planned. The critical reservoir information from the logs would also benefit further analysis of the test data. Based on the positive oil rates, stable gas oil ratios and low H2S content measured during the three-day test and data obtained from the 2013 seismic program, plans are progressing for the Shpirag-3 well, which is expected to be located approximately three kilometers south of Shpirag-2 and to begin drilling immediately after the Molisht-1 well has reached total depth. The lease construction work has been tendered and the necessary long lead items have been ordered in preparation for drilling. The company has submitted a phased appraisal plan for the Shpirag discovery to the Government of Albania.

The appraisal plan contemplates drilling additional wells, planning additional seismic, continued fracture studies and the scoping of extended testing facilities. “Based on the results from the pressure build-up analysis at Shpirag-2, we are seeing indications of many of the reservoir characteristics necessary to support deliverability and production from a deviated wellbore that would access the interconnected fracture network that we believe exists in the target carbonate reservoir,” said Mr. Glenn McNamara, CEO of Petromanas. “With the positive data we have on the Shpirag-2 discovery and additional seismic becoming available on Blocks 2-3, near-term next steps include obtaining an updated resource report generated by an independent third party in Q2 2014 and completing the drilling and testing of Molisht-1 in Q3 2014.”
 
The company reported that the Albanian National Agency of Natural Resources(AKBN) has communicated its intention to request payment from the Company’s bank in the amount of $5.4 mn against the company’s $6 mn performance guarantee outlined in the PSC for Blocks D-E. AKBN will request this payment as compensation for the financial commitment that was not completed by Petromanas in the second exploration period. Due to delays in receiving construction permits in 2012, Petromanas had requested an extension to complete its commitments for the second exploration period. In December 2012, the Albanian Ministry of  Economy, Trade and Energy (“METE” or the “Ministry”) approved the request for a one year extension and forwarded the revised PSC to the Albania Council of Ministers for ratification. This approval was
eventually received on July 28, 2013, which made it impractical to source a rig and drill a well by the new deadline of December 25, 2013. Prior to receipt of this approval, the Company had requested a revision to the original request due to the ongoing delay in obtaining the extension approval. Given these events, and
consistent with the terms of the PSC, the Company has submitted notice to AKBN requesting approval to enter into the third exploration period for Blocks D-E. The Company has further requested that the third exploration period would have a term of two years, as allowed in the PSC, commencing on the date of final government approval.

Petromanas has a 100% working interest in Blocks D-E totaling 259,650 gross acres. Blocks D-E are to the north of the Company’s discovery on Blocks 2-3 and outside of the areas of existing production in the country. Management believes that Blocks D-E have a higher risk profile than Blocks 2-3.

03/13/2014

 

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