Gulf Keystone increases holdings in Algeria

Apr 25, 2005 02:00 AM

Gulf Keystone Petroleum, an independent oil and gas exploration company, said that following the award of two contracts in the Algerian Sixth Licensing Round it has increased the size of its total holdings in the Republic of Algeria to more than 22,700 sq km.
The contracts significantly increase Gulf Keystone's existing Algerian portfolio, previously consisting of block 126a, by adding an additional six blocks. A total of 35 bids were placed involving 25 companies for 9 blocks. The other license winners were Shell (2 blocks), BHP (2 blocks), and BP (3 blocks).

CEO Todd Kozel said: "We have significantly increased our opportunities in the Algerian oil and gas sector."
"Whilst Gulf Keystone will have the benefit of appraising the existing oil and gas discoveries on these newly awarded blocks, we will also actively pursue the substantial exploration upside that Sonatrach estimates as over 1.5 bn boe in place," he said.

On Apr. 23, Gulf Keystone Petroleum signed contracts with the Algerian Ministry of Energy and Mines for both the Hassi Ba Hamou perimeter (blocks 317b1-322b3-347b-348-349b) in central Algeria's Bechar Oued Namous Basin, and the Bottena perimeter (Block 129) in north eastern Algeria's Constantine Basin.
Gulf Keystone Petroleum said the Hassi Ba Hamou perimeter covers an area of 18,380 sq km and contains one existing gas field, HBH, which Sonatrach's engineers estimate contains over 1 tcf of gas in place. The HBH Field was discovered in 1965 before the existence of the gas pipeline that now crosses the block, and, thus, has never been developed and put on production. The HBH-1 discovery well flowed at an initial rate of approximately 3 mm cfpd from porous sands above 3,200 feet depth.

Sonatrach's interpretation of the previously acquired 4,069 km of 2D seismic has identified 8 additional prospects and leads with combined exploratory potential of an additional 4.4 tcf of gas in place.
Gulf Keystone Petroleum said it plans to appraise the existing discovery, HBH-1, drill two exploration wells, acquire 100 sq km of 3D seismic and acquire 400 km of 2D Seismic during the first three year phase of the contract.

The Bottena perimeter covers an area of 4,368 sq km and is situated next to the eastern border of Gulf Keystone's Block 126a extending eastward to the Tunisian border.
The license area contains the Djebel Onk Field, which is excluded from the license, and the Hassi El Kerma Field which was discovered in 2001 and which Sonatrach identifies as containing 178 mm barrels of oil in place (27 mm barrels defined as proven and probable). This is more than 2.5 times larger than the resources they attribute to Djebel Onk which to date has produced 9 mm barrels of oil.

Sonatrach recently drilled two additional structures, on the permit area, DDN (2000) and HCZ (2002). Sonatrach have estimated that these structures contain a combined 182 mm barrels of oil in place.
Using its 5,300 km of 2D seismic, Sonatrach has mapped an additional two prospects and 21 leads that they assign estimated oil in place resources of more than 750 mm barrels.

Finally, Sonatrach has drilled 4 wells on what was the first hydrocarbon discovery in the basin (1954), the Djebel Foua Field. Sonatrach has previously tested gas at rates greater than 8 mm cfpd from depths above than 3,000 feet.
This field is only 20 km from the Trans-Mediterranean Pipeline. Gulf Keystone Petroleum also said that it intends to appraise the discoveries Hassi El Kerma and Djebel Foua, drill one exploration well and acquire additional 2D and 3D seismic on the Bottena Perimeter. The company also confirmed that drilling on GKS-3 commenced on Apr. 7.

Source: Dow Jones
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