Circle Oil announced the 2011 update to Ultimate Recoverable Resources (“URR”)1 for the NW Gemsa Concession, Egypt, and the Sebou Permit, Morocco, which indicates a significant increase over the 2010 URR estimates for both permits. The updated gross estimates were compiled by RPS Energy (“RPS”),an independent consultancy specializing in petroleum and gas reservoir evaluation. The estimates use the 2007 Petroleum Resources Management System (“PRMS”) produced by SPE/WPC/AAPG/SPEE and are set out in the tables below together with further explanation of the results.
The new resource estimates take account of the results of the drilling and development activity up to but not including Geyad-3.
The RPS report2 states that the most likely (P50) URR for the discoveries in NW Gemsa in Al Amir SE, Geyad plus South Gharib in Al Amir are 30.0MMBO and 34.2 bcf of gas, which together equates to 35.9MMBOE gross (14.4MMBOE net).3 This constitutes a 49% increase over the 2010 figure of 24.1MMBOE gross (9.6MMBOE net). The most likely unrisked URR in the Kareem reservoir in the Al Amir prospect is 3.9 MMBOE gross with a geological probability of success of 84%, as assigned by RPS. The Al Amir Kareem area volume was included in the Al Amir SE URR in the 2010 report, as at that time it was considered as an adjoining portion to Al Amir SE which had and has still not been drilled, but could be reasonably judged to be economically productive on the basis of geological, geophysical and engineering data. The 2011 total most likely (P50) recoverable resources estimate, to compare like with like areas (including Al Amir Kareem) with the 2010 report, is 33.2MMBO and 38.1 bcf of gas, which together equates to 39.8MMBOE gross (15.9MMBOE net). This constitutes a 65.1% increase over the 2010 figure of 24.1MMBOE gross (9.6MMBOE net).
The upside estimate (P10) for the discovered fields increases to 54.5MMBOE gross (21.8MMBOE net) which represents a 33% increase over the 2010 figure of 41.0MMBOE (16.4MMBOE net). The unrisked upside estimate of URR in the Kareem reservoir in the Al Amir prospect is 9.3MMBOE gross (3.7MMBOE net). The 2011 total upside (P10) recoverable resources estimate, to compare like with like areas, is 63.8MMBOE gross (25.5MMBOE net), which constitutes a 55.6% increase over the 2010 figure of 41.0MMBOE gross (16.4MMBOE net).
The increase in URR is due to a large increase in the estimated recovery factor from the Kareem reservoir which results from observation of well production performance data and the positive effect of the planned installation of gas production and water injection facilities, which are expected to be completed by the end of 2011.
The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).
The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 260 square kilometres, lies about 300 kilometres southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production licence of 20 years, plus extensions, in the event of commercial discoveries.
The new resource estimates take account of the results of the drilling up to and including KSR-11.
The RPS estimate of most likely (P50) URR of gas is 30.6 bcf gross (23.0 bcf net).This, together with our own internal estimate of gas production and resources remaining to be produced in areas not included in the report of 1.5 bcf gross, gives a total of 32.1 bcf gross (23.9 bcf net) URR for the Sebou block. This represents a significant increase in gas resources of 83.4% over the 2010 figure of 17.5 bcf gross (13.0 bcf net).
The RPS estimate of upside (P10) URR is 41.7 bcf gross (31.3 bcf net) which together with our own internal estimate of resources in areas not included in the report of 1.5 bcf gross, gives a total of 43.2 bcf gross (32.2 bcf net) for 2011, which represents a 66% increase over the 2010 figure of 26.0 bcf gross (19.3 bcf net).
In the Sebou concession, Circle has a 75% share and ONHYM, the Moroccan State oil company, has a 25% share. In the Oulad N’zala concession, Circle has a 60% share and ONHYM has a 40% share. Both concessions include the right of conversion to a production licence of 25 years, plus extensions in the event of commercial discoveries.
The Sebou permit lies to the north-east of Rabat in the Rharb Basin in Morocco. The Rharb Basin is a foredeep basin located in the external zone of the Rif Folded belt.
Prof Chris Green, CEO, said, “I am very pleased to report this significant uplift in resource numbers for the oil and gas discoveries on our NW Gemsa and Sebou blocks. This is testimony to both the continuing advancement of the partnership’s development and appraisal programme in Egypt and the success of our exploration drilling in Morocco. It also highlights the way in which the Company has been utilizing the funds raised from the placing in 2010 to create value for our shareholders. Our drilling success rate over the past three years has been excellent. We continue with our task of increasing both our production capability and resource base.”