Horizon Oil Limited announces that the Thailand Ministry of Energy has approved the award of Block G11/48 to a consortium that includes its wholly-owned subsidiary Horizon Oil (Siam) Ltd. It is expected that the concession agreement with the Royal Thai Government will be signed at a ceremony in Bangkok next month. The Company announced in December 2006 that it had been awarded Block G10/48, adjacent to G11/48 to the west.
As for G10/48, Horizon Oil will hold a 25% interest in the G11/48 concession in association with wholly-owned subsidiaries of Pearl Energy (50% and operator) and Tana Oil & Gas (25%). The G11/48 concession is located in the southern part of the Gulf of Thailand immediately west of the giant Bongkot field and the Malaysia-Thai Joint Development Area (JDA), which is a prolific gas province. Covering some 13,600 sq km, geologically the concession contains the northern end of the Malay Basin (shaded in yellow on the map). Bongkot has gas reserves of about 4 trillion cubic feet (tcf), while over 7 tcf of gas have been discovered in the JDA. Gas is currently being produced from Bongkot and the JDA into the Thai market, where industrial demand is high and gas prices attractive for producers.
The Malay Basin is a major oil and gas province extending some 500 km north to south from the Bongkot Field, offshore Peninsular Malaysia. The Basin is filled with up to 15,000 m of Tertiary aged lacustrine and marine sediments containing prolific hydrocarbon source and reservoir rocks. Some 12 billion barrels equivalent of hydrocarbon reserves have been discovered so far in the basin in approximately 70 oil fields and 90 gas fields. The US Geological Survey estimates that some 6 billion barrels equivalent of reserves remain to be found in the basin and Horizon Oil believes that much of that may be found in structural and stratigraphic traps on the basin margins, in settings similar to Block G11/48. Gas is the dominant reservoir fluid in the northern part of the basin where source rocks are deeply buried, and Block G11/48 is considered to be prospective for gas and condensate rather than oil. Previous operators have drilled 3 wells in the block, all of which tested gas and condensate in multiple zones.
The concession allows the partners to explore for hydrocarbons over a period of seven years and requires an agreed minimum work program to be carried out.
Commentary by Chief Executive Officer
“The award of Block G11/48, on top of the recent award of neighbouring Block G10/48, is good news for Horizon Oil shareholders. Our consortium now owns a commanding acreage position in two major petroleum producing trends, with a mix of oil, gas and condensate potential. It is worth epeating that this holding typifies Horizon Oil’s exploration objectives – it is a material acreage position (over 32,000 sq kms) in a well understood, relatively low risk fairway with large scale targets, where operating conditions are benign, oilfield services and infrastructure are abundant and where there is high local demand for both oil and natural gas (with consequent attractive prices being paid for gas).
The existing seismic database, which has helped us evaluate the prospectivity of both blocks, will be reprocessed this year and new seismic data acquired. An exploration drilling campaign of at least 4 wells will follow, to commence in late 2007 or, more likely, 2008.
We are also pleased to expand our activities in partnership with Pearl Energy and Tana. These companies are highly experienced in this type of exploration and development play – with Pearl Oil being a leading operator in the Gulf of Thailand and Tana having a very successful track record in the Gulf of Mexico.”