Sea Dragon Energy Inc. is pleased to announce that its wholly owned subsidiary Sea Dragon Energy Holding Ltd. has completed the acquisition of all of the issued and outstanding shares of National Petroleum Company Shukheir Marine Limited (“NPC SHM”), pursuant to the terms of a share purchase agreement dated December 6, 2012 between Sea Dragon Holding and National Petroleum Company Egypt Limited (“NPC Egypt”), for consideration of US$250,000 cash, paid at closing, plus the assumption of approximately US$3 million of NPC SHM’s working capital deficiency. The consideration will be funded from Sea Dragon’s existing working capital and cash flow.
The assets of NPC SHM include a 100% participating interest in the Shukheir Marine concession which contains the Shukheir Bay and the Gamma oil fields both of which are located in the shallow offshore Gulf of Suez. The Shukheir Marine concession currently produces approximately 460 bbls of oil per day. In addition to the oil and gas assets, NPC SHM owns oil field inventory, which can be applied toward operations and future drilling activity, valued at approximately US$ 4 million.
As a result of the Acquisition, NPC SHM is now a wholly owned indirect subsidiary of the Company. It is the Company’s intention to further develop the Shukheir Marine concession by pursuing both development and exploration opportunities that have been identified on 3-D seismic and geological mapping of the area.
Sea Dragon intends to proceed with the change of name of NPC SHM to Sea Dragon Energy (Shukheir Marine) Ltd. or such other name as the Board of Directors may determine and applicable regulatory authorities approve.
Shukheir Bay Field
The Shukheir Bay Field, which covers a shallow offshore water area of five km2, was originally discovered in 1980 through the drilling of a deviated well, which indicated oil in the Miocene Lower Rudeis sandstones. Subsequently, five additional deviated wells were drilled in the Shukheir Bay field. During the month of October 2012, the Shukheir Bay field produced oil through two wells with a combined daily rate of approximately 410 Bbl/d (34° API). Oil production is delivered to General Petroleum Company’s (“GPC”) Shukheir gathering station at the western onshore Shukheir area via three 2.2 km/4 inch pipelines for treatment (initial degassing and dewatering). The treated oil is then pumped to GPC’s facilities in the Um El Yusr station for further treatment before export.
The Gamma Field, which covers an area of 23.7 km2 of shallow offshore water was originally discovered in 1987 through the drilling of an exploration well, which tested oil from the Miocene Kareem formation and Cretaceous Nubia sandstones. Subsequently, eight additional wells were drilled in the Gamma Field.
The Gamma Field currently produces 44° API oil from the Miocene Kareem formation sandstone in the GA-1 well. Average production rates during the month of October 2012 were 50 Bbls/d. Oil produced from the Gamma Field is transferred to the western onshore Wadi Dara processing facilities for complete treatment through an 8 inch subsea pipeline. It is then shipped to the GPC Shukheir gathering station via a 22 km/6 inch pipeline. A 17.9 km multi-size pipeline (6 inch/8 inch/10 inch) then transfers the treated oil to the GPC facilities in the Um El Yusr station for further treatment before export.
Said Arrata, Chairman and CEO of Sea Dragon commented on the acquisition transaction: “This acquisition provides Sea Dragon with additional production, operatorship and visible growth from several drilling opportunities identified. The Shukheir Bay field is a mature field with low risk development drilling locations and work over opportunities.In addition, the Gamma field has a large exploration target identified on trend to a well which discovered a significant oil column in the Nubia formation. With the current production of 950 bopd from the NW Gemsa concession and 250 bopd from the Kom Ombo concession, the Company’s total production is now approximately 1,650 bopd. This acquisition is an exciting step forward in our effort toward building a sustainable, full-cycle exploration and development company”.