Emerald Energy Plc is pleased to provide the following update on the evaluation of reserves in fields held under the contract for exploration, development and production of petroleum in Block 26, Syria .
Khurbet East Field
An independent estimate of the petroleum reserves of the Khurbet East field at 31 December 2008 has been completed by RPS Energy Ltd (“RPS”), part of RPS Group Plc, based on data acquired up to 14 April 2009 which includes the data acquired in the Khurbet East No.8 well but not from the successful flow test after the acid stimulation operation.
The gross Proved plus Probable Reserves of oil contained in the Massive reservoir and recoverable within the period of the Contract are estimated to be 59.2 million barrels as at 31 December 2008 and to be 63.4 million barrels for the life of field. It is anticipated that optimisation of the field development may result in the 4.2 million barrels estimated by RPS to be produced outside the period of the Contract, also being produced within the term of the Contract.
An independent estimate of the petroleum reserves of the Yousefieh field at 31 December 2008 has been completed by Fugro Robertson Limited (“FRL”), based on data made available up to 31 March 2009.
The gross Proved plus Probable Reserves of oil produced within the period of the Contract are estimated to be 11.3 million barrels as at 31 December 2008.
Block 26 Net Entitlement Reserves
Under the terms of the Contract, there is a single cost recovery pool for all the fields within the Contract. The Operator has estimated the net entitlement Reserves attributable to the Company based on the estimates of gross Reserves provided by RPS and FRL, the terms of the Contract, and the Operator’s estimates of future oil price, development costs, and operating costs. Key assumptions include a Brent crude price of $45 per barrel in 2009 rising to $70 per barrel after 2012. It is assumed that the oil sold from Block 26 trades at an average $11 per barrel discount to Brent.
The Operator estimates that the total net entitlement Reserves of oil attributable to the Company at 31 December 2008 from fields in Block 26 is 8.1 million barrels on a Proved basis,14.3 million barrels on a Proved plus Probable basis and 21.9 million barrels on a Proved plus Probable plus Possible basis.
Net entitlement Proved plus Probable Reserves of oil attributable to the Company at 31 December 2008 in Block 26 has increased by 3.4 million barrel (31%) compared to the 10.9 million barrels reported in the annual report for the year ended 31 December 2008.
Emerald’s Chief Executive Officer, Angus MacAskill, said:
“We are very pleased with the material increase in reserves in Block 26 with the excellent production performance leading to improved recovery in the Khurbet East field and the addition of new reserves from the Yousefieh discovery. We are encouraged that full field development of the Khurbet East field, appraisal of Yousefieh, and exploration generated by the 3D seismic survey currently being acquired will lead to further opportunities for advancement.”
1. Reserves quoted on a working interest basis are provided by the Company and are not contained in the reports by RPS and FRL. Reserves on a working interest basis are the gross oil reserves of the field multiplied by the Company’s working interest in the Contractor group (50%).
2. The standard used in preparing the reserve estimates was the resource definitions jointly set out by the Society of Petroleum Engineers (SPE), the World Petroleum Congress (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE) in April 2007 in a document entitled “Petroleum Resources Management System” (PRMS).
3. Net entitlement oil reserves are the reserves that the Company is estimated to be entitled to recover under the terms of the Contract, after the application of royalties and other terms of the Contract including the apportionment of Cost Recovery Crude Oil and Production Sharing Crude Oil as determined under certain oil and gas pricing assumptions.
4. Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions.
5. Proved Reserves are those quantities of petroleum, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations.
6. Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate.
7. Possible Reserves are those reserves which analysis of geological and engineering data suggests are less likely to be recoverable than probable reserves. In this context, when probabilistic methods are used, there should be at least a 10% probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable plus possible reserves.
8. Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for the commercial development due to one or more contingencies.