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Assets OverviewThe Ukrainian assets, which are the Company's sole oil and gas assets, are a large gas and condensate field, comprising a series of stratigraphically trapped, paleo-deltaic sand reservoirs, extending under two neighbouring production licences over a combined area of 269 km2, approximately 200 km east of Kiev. These licences are known as the MEX-GOL and SV fields (100% Regal owned) and the interests are operated and managed by the Company as one field.
The field is located, geologically, towards the middle of the Dnieper-Donets sedimentary basin which extends across most of north-east Ukraine. The vast majority of Ukrainian gas and condensate production lies within this basin. The reservoir comprises a series of gently dipping Carboniferous sandstones of Visean Age (“B-Sands”) interbedded with shales that form stratigraphic traps at around 4,700 metres below the surface, with a gross thickness between 800 metres and 1,000 metres. Analysis suggests that these deposits range from fluvial to deltaic in origin. Below these reservoirs is a thick sequence of shale above deeper, similar, sandstones which are encountered at a depth of around 5,800 metres. These are of Tournasian Age (“T-Sands”) and also sandstones from the older Devonian Period (“D-Sands”).
The field was originally discovered in the 1960s during the Soviet era, with wells being drilled sporadically over the years since then, by State companies, prior to Regal's involvement. Only limited investment had been made in developing the assets by these companies resulting in limited production. Between 2000 and 2004, the former Regal/Chernihivnaftagasgeologia (CNGG) joint venture drilled two appraisal/development wells, MEX-102 and SV-52, and successfully completed three work-overs on Soviet-era wells. The Ukrainian Government declared the fields commercial in December 2003 and 20 year production licences (MEX-GOL and SV) were awarded to Regal in July 2004.
Over 20 wells had been drilled into the B-Sands prior to 2004, with five extending just into the upper T-Sands. Following the acquisition of 3D seismic data and its interpretation in 2008, the lateral extent of the B-Sands and T-Sands was defined and underlying D-Sands became apparent. Deep wells, drilled using top-drive rigs, were spud in 2009 with a drilling programme designed to target production from the B-Sands reservoirs, and also to appraise the deeper T-Sands and D-Sands deposits. This programme continued into 2010, but in so doing, the development of these deposits proved to be far more technically challenging than initially thought. As a result, further studies were undertaken, following which a drilling programme re-commenced using lower cost local drilling rigs.
In March 2014, an updated assessment of the remaining Reserves and Contingent Resources attributable to the MEX-GOL and SV fields, as at 31 December 2013, was undertaken by ERC Equipoise.
The results of ERC Equipoise's assessment can be found in the Company's announcement made on 25 March 2014, and estimate remaining 2P Reserves of 11.7 MMboe.
ProductionThe Company is currently producing gas and condensate from the MEX-GOL and SV fields. Details of production rates are announced regularly.
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