International Highlights
Pakistan has significant gas production and about half of Pakistan’s energy requirement is currently provided by domestically produced gas. Various international hydrocarbon groups have exploration and production projects in Pakistan. Mari Gas Company Limited (MGCL), which operates the second largest gas field in Pakistan, is a Karachi Stock Exchange listed group with the Government of Pakistan holding an 80% interest. International Sovereign is partnered with Mari Gas.
SUKKUR CONCESSION (2,435 sq. km)
A direct 15% working interest in the Sukkur Concession was acquired from Mari Gas Company Limited. The Concession is located in Sindh Province, Southern Pakistan and is within the Pakistan Government’s prospectivity Zone 3 area which is classified as low in exploration risk. There are no associated security issues and the Concession is near to the Mari Gas production field.
The Concession is within a core Pakistan gas fairway and numerous large producing gas fields with multiple gas reservoirs surround the Concession. Multiple gas related targets have been identified via seismic within the Concession.
Two initial high priority structures (“A” and “B”) have been selected for drilling based on extensive seismic. Prospect “A” covers a 5.0 sq. km area and Prospect “B” covers a 4.1 sq. km area. Mari Gas estimate (via Monte Carlo Simulation) that the likely recoverable reserves should be 40 bcf plus for each prospect subject to drilling success. The reservoir target is the Sui Main Limestone (Eocene) at a depth of 1,200 m (+/-), which is the primary producing reservoir in the adjacent fields. Consistent and good reservoir quality limestone is expected based on the dispositional model. Drilling of Structure “A” commenced in late April 2008 and each well is expected to take about 30 days (+/-) to complete on a back-to-back basis. As both structures are within 5 km from the pipeline, a discovery can be brought on-stream on a fast-track basis.
SUJAWAL CONCESSION (2,416 sq. km)
A direct 15% working interest in the Sujawal Concession situated in Sindh Province (about 100 km from Karachi), Southern Pakistan, was also acquired from Mari Gas. The Concession assignment agreements with the Government of Pakistan are pending.
The Concession is situated west of the Badin Area, Sindh Province, which contributes about 50% of Pakistan’s hydrocarbon production. Numerous hydrocarbon discoveries have been made to the North and East of the Concession.
A main gas pipeline is adjacent to the Concession. The primary target is the Lower Goru Basal Sand (Cretaceous) at a depth of approximately 3,000 m. An initial prospect in the Eastern part of the Concession has been identified from the re-interpretation of vintage 2-D seismic. Additional 3-D seismic will also be acquired and interpreted during the latter half of 2008 regarding well location finalization.
The Company, through a wholly-owned subsidiary, is the Operator of the Charapa Concession, Ecuador. The Concession is located in the north of Ecuador’s Oriente Basin adjacent to the Colombian border and 15 km northwest of the producing Lag Agrio field, Ecuador.
The Concession contains two Cretaceous reservoirs namely the Hollin sandstone and the Napo Formation (Caliza “B”) fractured limestone (about 10,000 ft). Cumulative past production from the Charapa discovery, prior to watering out, was approximately 1.694 million barrels of light oil, primarily from the Caliza “B” reservoir.
The Concession contains three (3) untested and prospective structures which are the areas covered by the modifications to the Concession Agreement, namely;
(i) Conejo; a seismically defined/drill ready structure, located about 16 km west of the former producing field. The Conejo structure is bordered to the east by the same pronounced reserve fault associated with the San Miguel field located 6 km to the north, across the Colombian border. A vertical well for reserve evaluation is planned for the second half of 2008.
(ii) Charapa S.W.; a seismically defined structure situated approximately 5 km southwest of the former producing field. This structure will be further evaluated seismically as part of a pending 50 sq. km 3-D survey.
(iii) Halcon; a seismically defined structure located in the southwest portion of the Concession which will also be further evaluated by the 3-D Seismic Program.
CHARAPA STATUS
A good portion of last year was taken up with resolving legacy issues covering the Company’s operating subsidiary and bringing all associated matters current and in good standing, which has been accomplished. In Q3, 2007 the contract for the required seismic and drilling environmental work was awarded. During Q4, 2007 extensive community consultation initiatives were progressed. Following completion of the associated fieldwork, the seismic and drilling Environmental Impact Reports were filed with the government during Q1, 2008 and the Report Findings were conveyed to the affected communities in association with government representatives through community meetings. Government approvals of the Environmental Reports is expected over the next 30 to 60 days such that the necessary permits and licences can be obtained for the seismic and drilling programs. These programs, which will be tendered, are scheduled for the second half of 2008. The estimated Charapa budget for the Seismic Program and the Conejo drilling is approximately $7.0 million. A work guarantee bond of US $2.4 million is in place and the bond progressively reduces against expenditure completions. The production split with PetroEcuador, the Ecuadorian National Oil Company, is approximately 50:50.
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