Under the agreement, Solimar is the operator and will retain a 35% interest post well, while earns a 50% interest in the Guijarral Hills project by paying a $200,000 share of past costs and funding 66.7% of the cost of the well which is budgeted at just over $2m dry hole and $2.5m completed and production tested.
The contract agreement deems that Solimar’s exposure to the dry hole cost of the well is approximately $340,000, which will be funded from working capital.
Site works have commenced for the well that has a programmed total depth of 10,400ft and will take approximately 35 days to drill.
The Solimar 76-33 well will appraise the mapped extension of the Guijarral Hills oil field which has produced more than 50 million barrels and target recoverable light oil resource of five million barrels with upside in the project of 25 million barrels, Solimar said.
The company expects four sandstone reservoir zones to be evaluated between 7,700ft and 10,400ft, and anticipates that if the drill program is successful, the well could produce at pump assisted initial rates of up to 400bopd and up to 10 extra drilling locations could be practicable.
The Paul Graham Drilling Service Rig # 5 has been contracted for the program and is expected by Solimar to be onsite by the third week of February.
