TBLISI, GEORGIA--(Marketwired - April 29, 2016) - Skyland Petroleum Limited (ASX: SKP) ("Skyland" or the "Company") is pleased to announce the completion of its acquisition of a 20% interest in the Block XIG Production Sharing Contract ("PSC") in the Republic of Georgia.
In November 2015, the Company signed an agreement with its local partner, Georgia Oil & Gas Limited ("GOG"), to acquire a 20% stake in the Block XIG licence. This transaction has now completed.
The Company is now working in collaboration with GOG under the Block XIG PSC. GOG is the majority owner and operator. The PSC in relation to Block XIG is secured in place until 2037.
In addition, the Company is pleased to report that drilling operations have been completed on the exploration well Kumisi #2. This well was located based on a seismic survey acquired by targeting multiple zones in Block XIG. The well reached a total depth of 2,357 metres. Petrophysical evaluation of the wireline logs indicates two potential oil bearing zones in the intervals from 1,787 to 2,015 metres. The lithology of the lower zone appears to be sand with an average porosity of 19%.
The upper zone appears to be Middle Eocene volcanoclastic sediments and limestones (as in the surrounding oilfields) and the Company believes the zone may contain oil bearing intervals associated with natural fractures.
A multi-zone testing programme is now commencing which will involve both conventional testing and the drilling of a high angle (sub-horizontal) sidetrack to intersect multiple fractures in the upper zone. This is an established technique in the area and this same equivalent zone is oil productive in the nearby West Rustavi and Samgori oilfields. The total testing programme is estimated to take some 7 to 8 weeks, and if successful, it should be possible to bring on production within a short period.
Dr. David Robson, the Company's Chairman and Managing Director, commented, "We are pleased to be announcing the completion of the Block XIG transaction following the final approval of our listing on the ASX. Since inception, we have gained solid ground in a challenging environment and will continue to grow our portfolio. Our initial aim is to establish short-term cash flow from low cost assets and Block XIG represents an attractive low cost acquisition with significant levels of exploration upside. We look forward to the production testing results of Kumisi #2 and moving forward on our work programme with our Georgian partners."
The XIG exploration block covers an area of 289 square kilometres and is located in the Kura Basin (also referred to as the Kartli Basin) and the Achara-Trialet Thrust Belt in Georgia. The Kura Basin extends over approximately 95,000 square kilometres from the middle of Georgia to the Caspian Sea. The Achara-Trialet Thrust Belt is located to the south of the Kura Basin and extends east from the Black Sea to the Caspian Sea. This thrust belt is also known as the Lesser Caucasus. The Kura Basin, an onshore extension of the South Caspian basin, has significant potential for both conventional and non-conventional oil and gas production. Block XIG is close to several producing fields, including the largest field discovered in Georgia, Samgori-Patardzeuli, which has produced over 200 million barrels of oil to date from the Middle Eocene formation.
An independently audited Resource Report prepared by Gustavson Associates, compliant with SPE-PRMS with an evaluation date of 3 December 2015, estimated the mid-case gross unrisked prospective resources of the South Prospect, which the Kumisi #2 well is targeting, as:
Prospective Oil Resources of 104 million barrels (MMbbl) (20.7 MMbbl net to Skyland)
Prospective Gas Resources of 1,035 billion cubic feet (Bcf) (206.9 Bcf net to Skyland)
The above information can be found in the Company's recent Prospectus (filed on February 18 2016) available on the ASX. Additional prospectivity exists in the block, with three other drill-ready structures identified.
Geographically, Georgia is a strategically positioned country at the crossroads of Europe and Asia, providing direct access to European and CIS markets. Georgia offers significant opportunities for commercialisation of oil and gas domestically as well as on the export market with well developed infrastructure and major operational oil and gas pipelines, including two trunk oil pipelines located in proximity to the Block XIG.
Skyland Petroleum Limited is an oil and gas exploration and production company listed on the Australian Securities Exchange (ASX) and primarily focused on projects in Central Asia, the Caucasus and Russia. The company aims to create and maximize shareholder value by acquiring and developing a portfolio of productive oil and gas assets with significant unrealized technical and commercial upside at attractive acquisition metrics.
This press release contains "forward-looking information". Such forward-looking statements reflect our current views with respect to future events and are subject to certain assumptions. The "forward looking statements" contained herein speak only as of the date of this press release and, unless required by applicable law, the company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise. The references in this press release to "prospective resources" means those quantities of petroleum estimated to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of these resources.
It should be noted that there are numerous uncertainties inherent in estimating reserves and resources, in projecting future production, development expenditures, operating expenses and cash flows of hydrocarbon prospects and/or projects. Oil and gas reserve engineering and resource assessment should be recognised as a subjective process which cannot be measured without an individual judgment being made. References in this announcement to prospective resource estimates have an associated risk of discovery and risk of development. Further exploration and appraisal may be required to determine the existence of any quantity of potentially moveable hydrocarbons.
Where any reference has been made to technical information prepared by any person within this announcement, it is noted that consents of such person have been sought where appropriate.
COMPETENT PERSON'S STATEMENT
Information in this announcement relating to hydrocarbon resource estimates has been verified by Mr. Rudolf Kriechbaum, VP Sub-Surface of Skyland. Mr. Kriechbaum has over 30 years of experience in petrophysics and is a member of the Society of Petroleum Engineers. Those prospective resource estimates contained within this announcement are made in accordance with the standard definitions set out by the Society of Petroleum Engineers, Petroleum Resource Management System. The more general regional information contained in this release has been verified by Dr. David Robson, Managing Director of Skyland. Dr. Robson is a geologist, holding a first class honours degree and a doctorate in geology. He has over 30 years experience in the oil and gas industry and is a Fellow of the Geological Society of London, a member of the Society of Petroleum Engineers, a member of the American Association of Petroleum Geologists and a member of the European Association of Geoscientists and Engineers. Gustavson Associates have given permission for the resources numbers to be disclosed.
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