TransGlobe has signed a farm out agreement with Vegas Oil & Gas (Vegas) to earn a 50% interest in the East Ghazalat concession in the Western Desert of Egypt, subject to the approval of the Egyptian government. The East Ghazalat concession is operated by Vegas, a privately owned oil and gas company.
The 858sqkm East Ghazalat concession is located in the prolific Abu Gharadiq basin of Egypt’s Western desert, approximately 250km west of Cairo. East Ghazalat was awarded to Vegas on June 5, 2007 and is currently in the first, three-year exploration period. There are two additional exploration period extensions of two years each.
TransGlobe has committed to pay 100% of three exploration wells to a maximum of $9m to earn a 50% working interest in the East Ghazalat concession. To date, the operator has acquired 450km of 3-D seismic to complement the existing 1,548km of 2-D seismic and 218km of 3-D seismic.
The drilling commenced on the first exploration well (Gawad #1) on January 14, 2010. The well is planned to reach a total depth of approximately 9,480ft by the end of February.
The company said that the Gawad #1 well is targeting a Jurassic prospect. TransGlobe’s estimated petroleum initially in place (PIIP) for the Gawad prospect is approximately 80 million barrels of light, crude oil in the P-mean case, with an upside potential of 150 million barrels PIIP in the P10 case.
The second and the third exploration wells are targeting 64 and 25 million barrels of light, crude oil, respectively, in the P-mean case with an upside of 140 and 50 million barrels in the P10 case, respectively (TransGlobe PIIP estimates). These wells are planned to be drilled consecutively following Gawad #1 during the first half of 2010.
The Hana #20 oil well was completed and placed on production in mid-January at 800bopd. With the addition of Hana #20 and Hana West #8 in December, the total production from the West Gharib area reached a new peak rate of 7,240bopd. The company has a 100% working interest in West Gharib.
The drilling rig is currently drilling a step-out appraisal well at North Hoshia #2, targeting the Nukhul and Thebes formations in the North Hoshia pool. Following North Hoshia #2, the drilling rig will move to the Hoshia field to drill a step-out appraisal well at Hoshia #8.
The average monthly production is expected to be 9,600bopd for the month of January, with 6,650bopd from West Gharib and 2,950bopd from Yemen. To date, the total production has exceeded 10,000bopd during the second half of January. The company is maintaining production guidance of 9,300 to 9,700bopd for 2010.