Highlights for the Quarter
• Janovice gas in place reserves increase by 250%
• 13% increase in forecasted net income for 2006 to £790,000 ( A$ 1.9 million)
• Planning more seismic including 3D over the field
• Gas price increase from 1 April 2006
• New drilling target defined in the Mosnov Permit
• Seismic survey completed in Morava
• Initial mapping in Roznov of the 2005 data confirms the leads
Revenue Upgrade
The continuing increase in the gas price in Europe (the latest increase being effective 1 April 2006) has resulted in a 13% increase in the forecasted income net of operating costs to more than £790,000 (A$1.9 million) for the calendar year 2006 based on current exchange rates and the delivery contract.
Production activities
Janovice Gas Field (60% interest)
The highlight of the quarter was the re-testing of the field in early January by an independent consultant as part of a planned monitoring program. Analysis of the test by the consultant indicated that the estimated gas-in-place is in the range of 3.8 to 4.0 billion cubic feet, which represents roughly a 250% increase over the figure announced when the field was first discovered.
As much as 80% of this gas could be recovered over the life of the field. The total amount of gas recovered will depend on the number of wells, future production rates and economic conditions. The increase in reserves presents the opportunity to drill further wells to develop the field and increase the recovery from it. Planning has already commenced on the first step in this process, the acquisition of a 3D seismic survey over the field in the surrounding area. The target is to acquire the data in the second half of the year, interpret it and start development drilling in the first half of 2007.
At the end of the quarter the well was producing a the currently contracted amount of 30,000 m3 of gas per day,
Krásná Oil Field (75% reducing to 50% after payout)
There was no production during the quarter due to the normal shutdown for winter. It is anticipated that production will re-commence towards the end of April, slightly later than usual due to the severe winter in Europe.
Two independent reports were received during the quarter on the Krásná 4 well and plans to run an extended production test in May were at an advanced stage at the end of the period.
Exploration activities - Czech Republic
Raskovice - Moravka (60%)
The permit lies immediately east of the Janovice gas field and the principal exploration target is the Karpat Sandstone as in Ja3a well. Interpretation of the seismic acquired in 2005 was nearly complete at the end of the quarter and will be delivered by the operator early in the second quarter. That part of the permit immediately east of the Janovice field is likely to be covered by the 3D seismic grid that is being considered in the area with further 2D data in other areas depending on the interpretation.
Mošnov, 90% interest (contributing 100%)
The set of leases near the Ostrava airport was first granted in March 2003. The project area has a number of small, shallow gas targets delineated by mapping of the numerous coal bores in the area.
The operator presented a thorough review of the permit in March that identified a drilling target at around 400m in Tertiary sandstones and sands within the Carboniferous section not far below it. The prospect is based on intersections in a network of some 28 coal exploration holes, 0.5 – 1 kilometres apart. It lies between the depleted Kremlin gas field to the north and the Priobor-Klokocov Field to the south which it is reported produced 23 billion cubic feet of gas between 1945 and 1984 at rates of up to 5 million cubic feet per day.
The proposed location is close to an updip of a coal exploration hole from which a gas flow of 80,000m3 (approximately 2.8 million cubic feet per day) was recorded in 1961, some two years after it had been drilled. While this open flow rate would not be sustainable, financial analysis presented with the review indicates that, given the strong gas price and the proximity of the gas transmission network, sustainable rates of as little as 10% of this figure could be economically attractive.
Encouraged by this the decision has been taken to commence the drilling application process and to seek a contractor to drill a well on the location in the second half of 2006.
Morava, 90% interest (contributing 100%)
The Morava project is located near Hodonin in the northern part of the Vienna Basin, a prolific oil and gas producer. Hodonin is the regional centre for oil and gas production. There is potential for oil and gas in both stratigraphic and structural traps at varying depths.
The seismic survey that commenced in the permit on the 14th October 2005 and curtailed by the contractor on 10th November 2005 was completed in the last days of January 2006. At the end of the period the processing of the data was around 75% complete and it is anticipated that the data will be delivered for interpretation in mid April.
The delay in the seismic acquisition naturally effects all other plans but the operator remains reasonably confident that one or two targets could be drilled in the last quarter of 2006 as planned, provided the targets are confirmed by the new data.
Rožnov, 90% interest (contributing 100%)
The permits cover an area of prospective sediments in variety of potential traps on a faulted margin. The most exciting leads are a series of features on the basin slope associated with high amplitude seismic events.
Processing of the new data and the reprocessing of selected lines of old data was completed during the quarter and a preliminary interpretation, which has confirmed the presence of the leads, has been completed. The quality of the new data is good enough to permit much more detailed analysis that will now be carried out.
A specially commissioned feasibility study of pipeline routes and drilling locations has thrown up differences between local and regional planning requirements. While these could be overcome this year it has been decided to take a measured approach and the drilling of the large targets will not now occur until 2007.
Slovak Republic (100%)
Carpathian has one current project in Slovakia at Plavnica. The area covers a relatively unexplored area in the north-east of the country where there were indications of oil in wells in the Lipany structure. A detailed review of the exploration and production potential of the area commenced during and is nearly complete