United Kingdom
In June 2005, Black Rock Oil & Gas entered into an agreement with Carrizo Oil & Gas Inc., to acquire 15% equity in that Company’s United Kingdom Continental Shelf holdings. The acquisition includes seven blocks situated in the central and southern sectors of the North Sea. An extensive modern 3D seismic grid has been recorded across the blocks and, at least three prospects are ready for drilling. Subsequently in conjunction with Carrizo, the company was awarded 22/8a from the 23rd round of United Kingdom licensing. As with the other blocks Black Rock has 15% equity in 22/8a.
These projects give Black Rock the opportunity to participate in moderate risk exploration wells. It is anticipated that drilling will commence during 2006 and the Company and a well will be drilled in each cluster.
All are in proximity to hydrocarbon accumulations. The blocks fall into three clusters:
Central North Sea Blocks 22/8a, 22/13b, 22/14b, and 22/19b
These blocks straddle a ridge extending from the Forties-Montrose High to the Jaeren High, both sites of major oil and gas fields. Major Kimmeridge Clay oil source kitchens are present to the north and to the south.
Three wells drilled within this cluster have encountered oil columns in Upper Jurassic or Triassic sandsones and several wells drilled in the immediate area have produced oil at economic rates. A number of prospects and leads are mapped within the cluster.
Southern North Sea Blocks 48/18d, and 48/23b
Blocks 48/18d and 48/23b are located on the southwest margin of the Sole Pit Basin, in which Carboniferous coals have generated large quantities of gas, which is trapped in good quality Permian Rotliegend Sandstone reservoirs below the regional Zechstein salt seal.
Nearby wells 48/22-4 and 48/17-12 tested 27 mmscfd and 41 mmscfd respectively from the Rotliegend. A number of untested Rotliegend prospects have been identified, including a re-drill of 48/18-8.
Southern North Sea Blocks 48/8c, and 49/9d
These blocks lie on the southern flank of the Silverpit Basin, in which Rotliegend and Carboniferous reservoirs are prospective. A number of untested prospects have been mapped within Black Rock’s acreage. Well 49/8-2A is believed to provide a “missed pay” opportunity in the Carboniferous. Only 5 mmscfd was tested from gas-bearing Carboniferous sands, but the borehole was badly washed out, and the low rate is attributed to resulting formation damage.
Outside the Company’s acreage, wells 49/9-3 and 49/9-5 tested 35 mmscfd and 5 mmscfd respectively from the Rotliegend. Another, untested structure is mapped within block 49/9d updip from the 49/9-5 discovery.
Licensing Options 04/5, 04/6, 04/7 & 04/8 (Equity 100%)
Licensing Option 04/8 provides Triassic oil and gas plays which are proven in the adjacent United Kingdom sector of the East Irish Sea Basin. Here Triassic sandstones form the reservoir in the Douglas, Hamilton and Lennox Oil Fields oil sourced from overlying Jurassic shales, and in the Morecambe Gas Field gas sourced from underlying Carboniferous coals.
In the Dragon Gas Field, discovered by Marathon, in the United Kingdom sector immediately to the south of Licence 04/8, Jurassic sandstones provide the reservoir for gas sourced from underlying Jurassic shales. The possible extension of this play into the area of the Licence will be evaluated.
Black Rock currently is carrying out regional geological studies, and reprocessing and reinterpreting existing seismic data over the licences, in order to better define their hydrocarbon potential. The Company will look to secure a promoted farm-out to a third party prior to drilling licences.
Quadrant 47 Block 2B - Southern North Sea Gas Basin
Black Rock has a 40% equity in Licence P1140 which is within Quadrant 47 Block 2B. The Company has assumed the role of Operator for the Joint Venture. Awarded in December 2003 as part of the 21st Offshore round, P1140 is close to and northeast of Hull.
Licence P1140 lies offshore in the north western part of the prolific Southern North Sea Gas Basin. Situated close to shore and is located less than 10 kilometres from the pipeline facilities servicing the Rough and Ravenspurn Gas Fields. It is on trend and about 5 kilometres northwest of the York Complex situated in the adjacent block.
Ireland
Black Rock was granted four offshore Republic of Ireland Licensing Options during November 2004. The Company has 100% equity in each of these Licences but will seek a third party to contribute to costs prior to drilling.
Licences 04/6, 04/7 and 04/8 were granted for a period of two years, after which the Company must negotiate either seismic acquisition or drilling. The fourth, 04/5 has a one year term, with the possibility of an extension. Three of the licences, 04/5, 04/6, and 04/7 are located in the North Celtic Sea Basin, while the fourth, 04/6 is situated in the Central Irish Sea Basin.
Colombia
During 2005 Black Rock acquired 50% interest in two Licences in the Middle Magdalena Basin, Colombia which is a prolific oil province. The Company acquired its interest in the Las Quinchas Association Contract from Kappa Resources Colombia Ltd (“Kappa”). As a consequence of this deal Black Rock also acquired the right to acquire equity in the Alhucema Block. The deals are subject only to approval by Ecopetrol, the Colombian State Oil Company.
Infrastructure in the area includes Ecopetrol’s oil refinery at Barrancabermeja, 75 kilometres northeast of the block, providing a convenient crude delivery point. The Veldsquez-26 truck terminal is situated just south of the Contract boundary and about 25 kilometres south of Bukhara.
The combined work programme is targeting both light and heavy oil accumulations.
Field activities commenced immediately following the Company’s entry into the project with the work-over and extended production testing of the Bukhara 1 oil discovery. Initial testing confirmed the presence of an oil column in this well. It is planned that completion of testing of this well will commence after the wet season 2006.
The Joint Venture also drilled, tested and flowed oil from the Arce 3 appraisal well which is also located in the Las Quinchas Association Contract. Arce 3 reported oil shows from a depth of 2,600 to 2,908 feet and flowed 13.5 degree oil on pump at rates between 25 and 36 barrels of oil per day with a constant water cut. Arce 2 produced 13o API oil at flow rates of between 10 and 60 barrels per day without steam flood.
Gross recoverable reserves at Arce are estimated to be about 5 million barrels of oil. The Company is initially concentrating on the Arce 3 Oil Field because it offers potential of early commercial production.
During 2006 it is also planned to test the Baul oil Field. It is planned to steam flood the Arce Oil Field in the near future. Typically steam flooding of similar oil fields in this region result in a 5 to 10 fold increase in oil production rates while water production is constant.