Garmian


Gazprom Neft commissions Second Well at Sarqala

Gazprom Neft subsidiary Gazprom Neft Middle East B.V. has commissioned a second well — the Sarqala-2 — at its Sarqala field (within the Garmian block), located in the Kurdistan Region of Iraq (KRI).

The new well is currently producing 11,000 barrels per day (bpd), with potential to increase this to 15,000. Total daily production at the field has now increased more than two-fold, exceeding 21,000 bpd.

Sergei Petrov, General Director, Gazprom Neft Middle East B.V. commented:

“The Sarqala-2 well is operating under high reservoir pressure and temperature. But by using exceptional technical solutions in well construction we have been able to make significant reductions in operating costs, as well as bringing the project in on time.”

Denis Sugaipov, Director of Major Projects Upstream at Gazprom Neft, added:

“Thanks to the commissioning of this new well we have been able to confirm our geological prognoses and obtain updated information on strata composition at the Sarqala field. The geology of the KRI is, generally, under-researched, so this new well is of major importance in terms of gaining knowledge and experience of the field.”

First oil from the Garmian block was obtained in 2011, with commercial crude shipments from the field commencing as early as 2015. As at 15.04.2018 total cumulative production at the field stood at seven million barrels of oil.

The first phase of expanding gathering and treatment capacity to 25,000 bpd is now complete, with work continuing on expanding infrastructure to accommodate 35,000 bpd. Drilling of the Sarqala-3 well is planned for Q3 2018, completing Phase I of field development.

(Source: Gazprom Neft)

Petrofac in Kurdistan Deal with Gazprom Neft

Petrofac has secured a three-year master services agreement (MSA) to support Gazprom Neft Middle East B.V. with the provision of engineering services on a call-off basis for the Garmian field in the Kurdistan region of Iraq.

The MSA was secured following a competitive tendering process and augments Petrofac’s extensive footprint in Iraq, where it has been providing engineering, operations, maintenance and training services since 2010.

Gazprom Neft has been Operator of the Garmian field since early 2016. Through the provision of engineering services Petrofac aims to support the planned brownfield works to debottleneck and expand the Central Processing Facility (CPF).

Steve Webber, Senior Vice President, Petrofac Engineering & Production Services, East said:

We are delighted Gazprom Neft has selected Petrofac as one of its key suppliers in support of the Garmian field CPF upgrade project.

“We have been working with this key client in Iraq for more than three years and hope to take this opportunity to build on our relationship through the demonstration of Petrofac’s fit-for-purpose and value-driven engineering solutions in the Kurdistan region.

(Source: Petrofac)

WesternZagros Boosts Capacity at Garmian

By John Lee.

WesternZagros Resources has announced that the operator has completed the installation of surface equipment to expand the Sarqala production facility.

Current production for the Sarqala-1 well is approximately 9,500 barrels per day of oil, which is in line with the company’s first quarter guidance expectations.

(Source: WesternZagros)

WesternZagros Announces 42% Production Increase at Sarqala-1

WesternZagros Resources has announced that the operator, Gazprom Neft Middle East B.V. (“Gazprom Neft”), has successfully performed an acid stimulation on the Sarqala-1 well located on the Garmian Block in the Kurdistan Region of Iraq in order to increase the well productivity.

The acid stimulation was completed on March 31, 2017 and Sarqala-1 is currently producing at a stabilized rate of 7,100 barrels per day (“bbl/d”) which is close to the limit of the surface equipment in its current configuration. This flow is being achieved on a 48/64 inch choke with a wellhead pressure of 5,800 pounds per square inch (“psi”) and with reservoir drawdown of only 220 psi.

This compared to a pre-stimulation flow of approximately 5,000 bbl/d on a 40/64 inch choke with a well head pressure of 4,150 psi and a reservoir drawdown of 2,150 psi. The current results represent a 42 percent increase in production rates. There continues to be no formation water produced. Further significant production increases are anticipated once the configuration of the surface equipment has been optimized.

Simon Hatfield, Chief Executive Officer of WesternZagros, commented:

These excellent results, combined with the significant increase in Garmian Reserves that we announced at year-end, reinforce our confidence in the quality of our Garmian Block.

“We congratulate Gazprom Neft on the results of the acid stimulation and will continue to work with them to optimize production. The enhanced deliverability from Sarqala-1, driven by the high-pressured Jeribe / Upper Dhiban reservoir, provides us with greater confidence in the production potential for future development wells.

The Company’s calculations indicate the productivity index (“PI”) of Sarqala-1 has increased by an order of magnitude. The PI is a measure of the well’s potential to produce – it is the ratio of the production rate to the pressure drawdown at the reservoir. This substantial increase in PI anticipates further production gains as the Operator continues to optimize the surface facilities.

The Company will continue to monitor the increase in production rates and pressures and once sufficient data is obtained to demonstrate sustainability the Company will work with its independent auditors on the potential for a further increase to its reserves and their valuation.

(Source: WesternZagros Resources)

WesternZagros Announces increased Oil Reserves

WesternZagros Resources has announced a 60 percent increase in the company’s Proved plus Probable (“2P”) Reserves and a 250 percent increase in the net present value of the future net revenue of such reserves discounted at 10 percent (“NPV10”).

The company has also provide d an Operational Update and confirmation of receipt of all proceeds for 2016 oil sales.

Reserve Report Highlights

The Company’s Reserves as at December 31, 2016 were evaluated by the Company’s independent reserves evaluators, Sproule International Limited (“Sproule”) for the Sarqala Jeribe / Upper Dhiban reservoir on the Garmian Block located in Kurdistan, Iraq in a report dated February 28, 2017 (the “2016 Sproule Report”).

The 2016 Sproule Report has been prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGEH”) and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI51-101”).

Highlights of the 2016 Sproule Report in comparison with the reserves evaluation completed by Sproule as at December 31, 2015 include:

  • The estimated 2P Reserves (Gross Block) increased by 60 percent to 20.7 million barrels (“MMbbl”) of oil.
  • The estimated NPV10 of the Company’s 2P Reserves increased by 250 percent to US$113.4 million.(1)
  • On a fully diluted share basis, this NPV10 reflects a value of CAD$0.18/share.(2)

More information here.

(Source: WesternZagros Resources)

 

WesternZagros Announces Results

By John Lee.

WesternZagros Resources has announced its operating and financial results for the second quarter ended June 30, 2016.

Commenting on the second quarter results and subsequent events, WesternZagros’s Chief Executive Officer Simon Hatfield said:

A significant key milestone was reached with the approval of the Garmian Field Development Plan confirming the commercial potential of this project. The Sarqala-1 well has now produced over 3 million barrels of light oil to date with no indications of formation water and no hydrogen sulphide.

“In parallel, the Kurdamir project continues to advance with the submission of the Kurdamir Field Development Plan in conjunction with Repsol’s Topkhana Field Development Plan which envisions surface facilities shared between Kurdamir and Topkhana.”

“We believe the quality and scale of our oil and gas assets provide opportunities to realize the fundamental inherent value related to our long-life, low-decline assets and significant long-term oil and gas potential related to the Kurdamir and Garmian projects. We are encouraged by the leadership demonstrated by our co-venturers, Repsol and Gazprom Neft, to progress our respective major development and growth projects.

Financial and Operating Highlights

Development Plans – WesternZagros and its co-venturer, Gazprom Neft Middle East B.V. received approval of the Garmian Block Field Development Plan from the Kurdistan Regional Government on May 26, 2016. The Garmian FDP is focused on the development of the Jeribe/Upper Dhiban reservoir.

With the approval of the Garmian FDP, the Company paid its share of the first production bonus due to the KRG in accordance with the terms of the Garmian PSC of $1.0 million.On May 27, 2016, the Company and Talisman (Block K344) B.V., a wholly owned subsidiary of Repsol S.A. submitted the revised Kurdamir Block Field Development Plan (“Kurdamir FDP”) to the KRG to develop the Block’s significant oil and gas resources.

Phase 1 is focused on the development of the Oligocene oil and gas discovery and includes a 150 million cubic feet per day (“mmcf/d”) central processing facility (“CPF”) shared equally between the Kurdamir Block and Repsol’s adjacent Topkhana Block.

The full results are available here.

(Source: WesternZagros Resources)

WesternZagros Resumes Production at Garmian

WesternZagros Resources has announced the resumption of crude oil production and sales from the Sarqala-1 well in the Kurdistan Region of Iraq.

Sales are to be in accordance with the payment mechanism for crude oil sales announced by the Ministry of Natural Resources of the Kurdistan Regional Government on February 1, 2016 based on the contractual entitlements under the Garmian Production Sharing Contract.

Gross production rates are expected to average approximately 5,000 barrels per day for the well with monthly payments to be received within 10 working days of the following month.

(Source: WesternZagros)

Gazprom Updates on Iraq Ops

By John Lee.

In a Management Report released to the markets, Gazprom gave the following update on its operations in Iraq:

  • The Badrah field (pictured) (30% held by Gazprom Neft Group): In 2015 production was 1.4 million tons of oil, a level sufficient for the project to pay back.
  • The Garmian block in Iraq (Kurdistan) (40% held by Gazprom Neft Group): In 2015 oil production was a total of 219.0 thousand tons.

(Source: Gazprom)

WesternZagros Review Financing

By Simon Kent.

WesternZagros Resources Ltd. (TSX VENTURE:WZR) or the “Company”) announces that an agreement has been reached with its major shareholder, Crest Energy International, LLC (“Crest”).

The agreement will defer the latest first drawdown notice date under the first tranche of its US$200 million unsecured credit facility from the original date of January 1, 2016 to May 1, 2016.

The Company felt it was prudent to increase the flexibility of its debt facility in order to reduce commitment fees and interest costs to the Company as it does not expect to need to access any loan funds until the second half of 2016. In addition, the Company is undertaking a review of all financing alternatives available to it to better align with currently anticipated capital needs.

Simon Hatfield, WesternZagros’s Chief Executive Officer (pictured) explained the reasoning behind the review:

“To ensure the long-term sustainability of our assets, deferring the timing of the first tranche of the credit facility allows us to improve our capital flexibility and significantly reduce financing costs for the development plans on Kurdamir and Garmian. We are also exploring alternative financing alternatives to allow for optimum alignment of capital availability with our development plan needs in order to provide the best available outcome for the Company and all its stakeholders.”

Hatfield noted that the review was not limited to financing:

“Cost management continues to be an ongoing focus. As part of this exercise the Company has also decided to not award any discretionary cash bonuses for 2015 and to not award any base salary increases for 2016.”

The Loan Agreement between the Company and Crest dated August 14, 2014 (the “Loan Agreement”) consists of two tranches for a total borrowing capacity of USD $200 million, with the first tranche having a loan limit of USD $150 million and the second tranche having a loan limit of USD $50 million.

Pursuant to the terms of the Loan Agreement, a drawdown notice in respect of the first tranche was originally required to be given by the Company by January 1, 2016 and a drawdown notice in respect of the second tranche is required to be given by the Company by June 1, 2016, failing which the availability of the applicable tranches will expire. Once an initial draw has been made under any tranche, the drawn amounts on the first and second tranches accrue interest at 12 and 14 percent per annum, respectively, and the undrawn amount under such tranches accrues a commitment fee of 8 percent per annum.

The agreement reached with Crest allows the Company to defer the latest first drawdown notice date under Tranche 1 from January 1, 2016 to May 1, 2016. This would have the effect of reducing the commitment fee and better align the terms of the credit facility with the expected need for capital. All other terms under Tranche 1 and Tranche 2, including the maturity dates, which are October 1, 2017 and June 1, 2018, respectively, will remain unchanged.

The Company has sufficient funds to pay the principal and accrued interest on the outstanding CDN$100 million principal amount of 4 percent convertible notes which are due on December 31, 2015 and would expect to end 2015 with working capital in the range of US$40-45 million after making this payment.

In addition, the Company is undertaking a review of all financing alternatives available to the Company. It is contemplated that the review will include, but is not limited to, the completion of an alternative debt financing or equity financing, or the farm down or sale of some of the assets of the Company. In connection with this review, the Company has retained TD Securities to act as its financial advisor. It is the Company’s intention not to disclose developments with respect to the review process until the Board of Directors has approved a specific transaction, action plan or otherwise determines that disclosure is necessary or appropriate.

(Source: Western Zagros)

WesternZagros Updates on Kurdistan Ops

WesternZagros Resources has announced its production of light oil in the Kurdistan Region of Iraq averaged approximately 5,000 barrels per day in the third quarter.

As previously disclosed, operatorship of the Garmian Block was to transition from WesternZagros to Gazprom Neft Middle East B.V at the end of the exploration period for the block pursuant to agreements entered into in 2012.

While the Company had been requested to continue operatorship for a period of time following the end of exploration, the co-venturers are now in the process of implementing this transfer of operatorship.

Garmian Block

Production from the Sarqala-1 well in the third quarter remained on target, averaging approximately 5,000 barrels of light oil per day (“bbl/d”) and has averaged approximately 5,200 bbl/d since commencement of production from the well on February 11, 2015. Since the time of the first extended well test in 2011, the well has now produced 2.2 million barrels of oil with no formation water.

Hasira-1 has been successfully and safely suspended and future options to utilize the well bore are being evaluated.

CEO Simon Hatfield (pictured) stated:

We are now ready to transfer operatorship to Gazprom Neft according to the original 2012 agreement …

WesternZagros took the initial exploration risk that resulted in the Sarqala light oil discovery and also started production to unlock the potential of the block.

“Now it is time to turn development operations over to a world-class operator with extensive technical, operational and regional expertise in crude oil production, refining and marketing. Gazprom Neft is a US$10 billion company that shares our vision of the Garmian Block’s potential.

Operatorship is expected to transfer on or before the end of the first quarter of 2016. Pursuant to amendments to the Production Sharing Contract entered into in 2012, Gazprom Neft was to assume operatorship with the move from the exploration period to the development period in December 2013.

However, this action was deferred at the time and WesternZagros was asked by its co-venturers to remain as the operator during the interim period.

The current period is a convenient time to transfer operatorship while the Garmian Field Development Plan (“FDP”) is under final review by the Kurdistan Regional Government (“KRG”). Based on the current anticipated timing of FDP approval, the Sarqala-2 development well will likely be spud in the first quarter of 2016. During this time, the co-venturers will finalize the transfer of operatorship and continue to evaluate lower-cost drilling rigs and support contracts to reduce capital costs.

Gazprom Neft Group consists of more than 70 production, refining and sales subsidiaries in Russia, neighbouring countries and further afield. It refines approximately 80 percent of all the oil it produces, one of the highest ratios of all Russian companies in the sector.

It is the third-largest oil company in Russia by refining volume and the fourth largest in terms of production. Gazprom Neft is the operator of two other blocks in the Kurdistan Region, where exploration drilling programs are ongoing, and is the operator of the US$4 billion, production-stage Badra Project in western Iraq.

Kurdamir Block

WesternZagros and its operator in the Kurdamir Block, Repsol S.A., continue to actively work with the KRG to advance the development plan for the Kurdamir oil and natural gas discovery. It is expected that these plans will be finalized in the first quarter of 2016.

Corporate

As the operatorship of the Garmian Block is transitioned to Gazprom Neft, WesternZagros is looking to apply its extensive core expertise in exploration and early-stage development, as well as its well-capitalized balance sheet, to assess other potential opportunities in the Kurdistan Region of Iraq, and elsewhere in the Middle East and North Africa.

(Source: GKP)