Thereafter, Orca will fund all future costs relating to the well and the permit in proportion to its participating interest.
Drilling is expected to commence in the fourth quarter of 2010. Orca has also agreed to pay Petroceltic 15% of the back costs in relation to the well up to a maximum of $0.5m.
David Lyons, chairman and CEO of Orca Exploration, said: “Orca is delighted to be partnering with Petroceltic in drilling the Elsa-2 well. This is a great fit for us. We see this as a low risk opportunity in a proven hydrocarbon basin. Elsa-2 is going to be drilled in a stable jurisdiction, in an exploration area that has a lot of upside potential.
“We see this farm-in as similar to PanOcean Energy’s entry into Gabon. There we moved into an area that had lost the attention of the major players and we worked with others who had a similar vision to develop a substantial reserve.”
The Elsa field was discovered in 1992 by AGIP with the drilling of the Elsa-1 well which encountered an oil column of 65mt in the Lower Cretaceous Maiolica Formation at a depth of approximately 4,500mt.
The low risk Elsa-2 appraisal well has the primary objective of confirming the commercial production potential of the reservoir when flow tested. Positive results from Elsa-2 will be followed by a 3D seismic survey over the field.
In addition to interest earned in the drilling of Elsa-2 Orca’s farm-in agreement with Petroceltic provides an opportunity for Orca to participate on a ground floor basis in an additional 11 Petroceltic held exploration blocks in the Central Adriatic in which Orca could also earn a 15% working interest.
