Verenex Energy Inc. confirms an oil and gas discovery at the H1-47/02 new field wildcat ("NFW") exploration well in Area 47 in the Ghadames Basin. The H1 discovery is the Company's tenth oil and gas discovery in Area 47 since drilling began in September 2006. The Libyan National Oil Corporation ("NOC") has also announced this discovery.
The Company also advises that since the last operational update on November 12, 2008, the I1-47/02 NFW exploration well (well No. 16) was successfully tested, the J1-47/02 NFW exploration well (well No. 17) was drilled and cased and is preparing to test, the K1-47/02 NFW exploration well (well No. 18) was drilled and is currently being cased and the L1-47/02 NFW exploration well (well No. 19) was spudded on January 2, 2009 and is currently drilling.
H1-47/02 NFW Exploration Well Confirmed as Oil and Gas Discovery
The H1-47/02 NFW exploration well (well No. 15) is located approximately 8.0 kilometres north of the Company's nearest oil and gas discovery at E1-47/02 in Block 2 and was drilled and cased to a depth of 10,475 feet in the Memouniat Formation. The Company carried out successful extended flow tests on the H1 well from a total of 155 feet of perforations in three sandstone intervals, including a 73 foot interval in the Memouniat Formation and two intervals totalling 82 feet in the Lower Acacus Formation. The tests yielded a combined maximum measured flow rate, as restricted by test equipment capability, of approximately 1,315 bopd (gross) of light sweet crude oil and 16.2 mmcf/day (gross) of natural gas through choke sizes on particular intervals ranging from 32/64ths to 48/64ths inch. Measured API gravity of the crude oil ranged from 42 to 64 degrees.
The Company believes that the oil flow rates from the two Lower Acacus intervals are not representative of the capacity of these intervals and were negatively impacted by water production from a separate underlying water zone that flowed behind casing due to a poor cement job over part of the Lower Acacus Formation. Analysis of the cement bond log and subsequent temperature and spinner surveys confirmed this interpretation.
The H1-47/02 well is significant from two standpoints. Firstly, it extends the Lower Acacus play fairway further to the northeast in Block 2. Secondly, it is the third tested liquids-rich gas and condensate discovery in the Memouniat Formation in Area 47 and has extended the area of the Memouniat play fairway such that it is now considered a primary exploration target together with the Lower Acacus.
To-date, ten NFW exploration wells and two appraisal wells have tested at a maximum aggregate rate of approximately 99,320 bopd of oil and 92.7 mmcf/day of natural gas (gross). These wells have been suspended as potential future oil and gas production wells.
I1-47/02 NFW Exploration Well Successfully Flow Tested
The I1-47/02 NFW exploration well (well No. 16) was drilled and cased to a depth of 10,925 feet in the Memouniat Formation. Testing operations utilizing the KCA DETAG Service Rig 32 were recently completed in two intervals, including a 44 foot perforated interval in the Memouniat Formation and a 40 foot perforated interval in the Lower Acacus Formation. Test results and confirmation of well status will be released following the normal review by the NOC.
The I1-47/02 well is the first well drilled in the Central 3D seismic survey area in the north-western part of Block 2 south of AGOCO's G1-NC02 oil and gas discovery. The positive results extend both the Lower Acacus and Memouniat play fairways into the north-western part of Block 2.
J1-47/02 NFW Exploration Well Drilled and Cased and Preparing to Test
The J1-47/02 NFW exploration well (well No. 17) was drilled and cased to a depth of 11,420 feet in the Memouniat Formation over a period of 39 days from spud to rig release. The J1 well is located in the southern part of Block 2 approximately 6.0 kilometres northeast of the Company's A1-47/02 oil and gas discovery and 3.0 kilometres west of the F1-47/02 oil and gas discovery.
Extensive formation evaluation results indicated the presence of hydrocarbons in two sand intervals in the Lower Acacus Formation (Basal Sand 1 and Upper Shoreface). In Basal Sand 1, the results indicated a thick oil column of approximately 66 feet with an underlying water oil contact that is at a different subsea depth than the contacts found in the A1 field and F1 well suggesting that the J1 structure may be isolated. Testing may assist in confirming this interpretation. Basal Sand 1 contains the majority of the contingent resources in the A1 field and in other fields in the southern part of Block 2.
The Company plans to test the J1 well commencing in late January 2009.
K1-47/02 NFW Exploration Well Drilled and Currently Running Casing
The K1-47/02 NFW exploration well (well No. 18) is located in the north-western part of Block 2 approximately 6.3 kilometres south of the I1-47/02 well. The well was drilled to a final depth of 10,965 feet in the Memouniat Formation and is currently being cased.
The well encountered oil shows in the Lower Acacus and very strong gas shows in the Memouniat Formation and in what appears to be a highly fractured zone in the Tanezzuft Basal Hot Shales. This is an encouraging result because the Tanezzuft Hot Shales contain the organic rich source rocks for hydrocarbons in the Lower Acacus and Memouniat Formations and is a potential oil and gas resource play in its own right.
The Company expects to test the K1 well following testing of the J1 well.
L1-47/02 NFW Exploration Well Drilling
The L1-47/02 NFW exploration well (well No. 19) spudded on January 2, 2009 with Ensign Rig No. 28. The L1 well is located approximately 5.0 kilometres southeast of the A1-47/02 oil and gas discovery on a prospect identified on the new 2008 2D seismic.
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