London-listed Genel Energy is set to gain a 23% stake in the in the Bina Bawi exploration licence in the Kurdistan region of Iraq.
Genel will acquire the stake by purchasing all of the share capital of Petoil subsidiary, A&T Petroleum, for $175 million.
The 246 square kilometre Bina Bawl licence area lies alongside the producing Taq Taq oilfield which currently produces about 80,000 barrels a day and is projected to rise to 200,000 bpd.
Genel said three wells had been drilled on the block to date with the first well Bina Bawi-1 encountering significant oil shows while drilling through the Cretaceous zone and tested 6 million cubic feet of gas per day in the Triassic zone in 2007.
It added the third well, Bina Bawi-3, intersected a gross hydrocarbon column of more than 800 metres in the Jurrasic zone, with two reservoir intervals, which were tested separately and achieved an aggregate flow rate of more than 4000 barrels a day of light, 44 to 47-degree API oil.
Another hydrocarbon column, which Genel said was estimated at over 1000 metres, was intersected in the Triassic zone but is yet to be tested.
“What we are acquiring is very high-quality acreage in an area immediately adjacent to Taq Taq, one of our major established fields which we plan in due course to link by a pipe line to the region’s main export pipeline from Kirkuk to Ceyhan,” Genel chief executive Tony Hayward said.
“Our estimate is that the Bina Bawi discovery has contingent resources of some 500 million to 1 billion barrels of oil and oil equivalent, with some additional prospective upside.”
OMV operates the Bina Bawi licence with a 36% stake, Prime Natural Resources holds a 21% interest and the Kurdistan Regional Government holds a 20% interest which is carried on a pro rata basis.