Petrel Resources, the AIM listed Iraq focused oil company announces Preliminary Results for the year ended 31 December 2006.
2006 Highlights
• The passage of the Iraqi Hydrocarbon Law is expected to open up significant opportunities for Petrel.
• Work continues on the development of the 240,000 barrel a day Subba and Luhais oil field in southern Iraq which is expected to come on stream in 2010. Petrel is the project contractor.
• The technical and geological review of the Merjan oil field has been completed and submitted to the Iraqi authorities. A further study is likely.
• The company’s exploration and technical partnership with ITOCHU of Japan was used on the Merjan study.
• In May 2007, a Production Sharing Agreement between Petrel and the Jordanian authorities was signed covering the 8,750 sq. km East Safawi oil/gas block.
Overview of Operations
Petrel have had a continuous presence in Iraq since 1999. Since early 2000 the company have worked on the large 10,000 sq km Block 6 exploration concession in the western desert. After submitting four tenders to develop oil fields Petrel were successful in 2005 when they were awarded the $197 million Subba and Luhais development contract. In 2005, they negotiated a technical co-operation agreement on the Merjan oil field. Petrel are confident that the passing of the Hydrocarbon Law will open additional and exciting opportunities.
Currently Petrel is busy with the large oil field development at Subba and Luhais. This development, the largest awarded in recent years by the Iraqi Oil Ministry, will produce 200,000 barrels of oil a day and 120 million cubic feet of gas when commissioned in 2010 and will cost about $197 million. Most of the work to date has been in engineering design, plant layout and design and project team mobilisation. The Iraqi Ministry of Oil currently produces oil at lower production rates from the fields.
Apart from their work in Subba and Luhais, Petrel are active on the Merjan oil field technical agreement. Petrel were awarded this contract as part of a very good programme whereby the Iraqi authorities ask international oil companies to analyse and evaluate selected undeveloped or complicated oil discoveries. Because of work carried out by Petrel on their Block 6 exploration concession, the authorities commissioned Petrel to study Merjan some 45 km east of Block 6. During 2006, Petrel reprocessed over 500 kms of seismic and conducted structural, stratigraphic, petrophysical and petroleum engineering studies. The final report was presented in May 2007. An additional study is being considered.
Petrel have worked on Block 6 in the western desert of Iraq since 2000. This 10,000 sq km block has had only exploratory seismic surveying and no drilling. Work to date suggests that there is significant hydrocarbon potential. Though Petrel signed an agreement on Block 6 with the Oil Ministry in Baghdad the company expect the contract to change to reflect the better terms in the new law.
Further, in recent years Petrel have worked with the Oil Ministry to upgrade their technical, financial and commercial skills. This involves Petrel running courses employing world class instructors to work with their own technical staff. These courses have been held in Amman and Istanbul.
Partner
Petrel have a significant partnership with ITOCHU of Japan. ITOCHU is one of Japan’s leading upstream oil and gas companies. Petrel have had a relationship for some years which was formalised in 2006 with the signing of a strategic partnership to cover future exploration activities in Iraq.
Jordan
For some years now Petrel has been looking at opportunities in Jordan. The work done by Petrel on Block 6 in Iraq showed similar geology and, the company hope, for similar opportunities in Jordan close to the Iraq border. In 2005, Petrel signed an initial agreement with the Jordanian authorities on the East Safawi Block, an 8,750 sq km area adjoining the Risha gas field. In May 2006 the company negotiated the terms of a Production Sharing Agreement (PSA) which was finally signed in May 2007. The PSA provides for a three year exploration phase leading to drilling. Petrel are currently reprocessing and reinterpreting seismic and well logs. This will be followed by new seismic. Commercial terms are good in Jordan.
