OilVoice - Valiant Petroleum Provides Don Development Update

Valiant Petroleum Provides Don Development Update

Monday, August 10, 2009

Valiant Petroleum plc provides the following update on the West Don and Don Southwest fields (together the “Don Fields”).

West Don
Valiant is pleased to announce that the second production well on West Don (Valiant, 17.275%), located in Blocks 211/18a West Don Area and 211/13b (License P236 and P1200 respectively) in the UK North Sea, began production at the end of last week and start-up flow rates have been in line with expectations. The water injection well has now been completed and will be ready to begin pressure support in the coming weeks.

The first production well on West Don has been producing at a gross rate of around 6,000 barrels of oil per day (“bopd”) having experienced a steeper decline than was initially expected at the time of Field Development Plan submission. The performance is, in part, a result of the delay to pressure support from the water injection well. Production from the well has now been stable for some time and the partners believe that the imminent start-up of the water injection well will support production rates along with improved uptime on the Northern Producer. Based on the limited reservoir information gathered so far, the potential for a third production well in the south of the field is currently under consideration by the field partners.

Don Southwest
Following the recent announcement of first oil from Don Southwest (Valiant, 40.0%), located in Block 211/18a (Licence P236), Valiant is pleased to announce that a successful side-track from the Area 5 injector well has been drilled into a newly identified Horst section proving up additional oil volumes. The Horst is a structural high between Areas 5 and 6 and has excellent reservoir quality with high oil saturations giving internal estimates of gross recoverable reserves of around seven million barrels of oil. Development of the Horst is now likely to take precedence over Area 6 in the completion of the first phase of the development programme next year.

Following this, a second development phase is being planned which will include Area 6 as well as the recently discovered ‘H’ Panel on which Valiant has placed preliminary internal gross recoverable resources of around nine million barrels of oil.

While production potential has been demonstrated to be high from Don Southwest, actual production is currently limited to the Area 5 well which is currently producing at gross rates of around 12,000-14,000 bopd, with actual average production rates constrained by facilities uptime and shuttle tanker offloading schedules.

The Area 22 production well to the south of the field has a completion blockage and the well is shut-in until gas lift can be delivered from the Northern Producer in a few weeks time or an intervention is undertaken at the end of the current phase of drilling in September. The water injection wells in both Area 5 and 22 are anticipated to be on-stream during September, slightly ahead of schedule.

Outlook
Due to the longer-than-anticipated period in the commissioning of the overall Don Fields, the Company will be below its previous 2009 production guidance given at the time of its preliminary results in April. Valiant expects to exit 2009 with around 10,000 bopd of net production capacity and guidance for 2010 will be updated following commissioning of all of the current well-stock across both of the Don Fields.

Valiant’s overall view of the Don Fields remains very positive based on the recent discoveries in the ‘H’ Panel and Horst Block in Don Southwest and the field partners are in the early stages of planning for further development phases for the area over the next 18-24 months to take advantage of lower service costs available in the market at present.

Peter Buchanan, Valiant’s CEO, commented:
“Valiant is pleased that the Don Fields have now collectively produced over a million barrels of oil on a gross basis. We remain very excited about the overall potential and future growth of the Don area following our recent discoveries in-and-around the core project. Valiant and its partners have begun to plan further phases of the Don project for 2010 and onwards to maximize the value potential of the overall area.”

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