As operator, Circle Oil Maroc Ltd, conducted a 3D seismic survey during late 2007 and early 2008. This was followed in late 2008/early 2009 by a 6 well drilling campaign which completed the required commitment for the first 3 year period of the Concession Agreement.
Individual prospects are small in size but are economically interesting. They are shallow and located generally between 500-1500 metres. They are also very inexpensive to drill and hook up due to the presence of a local gas pipeline network. There is furthermore a good established market with increasing demand for the sale of the natural gas to local industry at attractive rates.
Gas Production and Well Tests
The permit is important as it provides COML with a low risk concession with the concomitant potential for low cost, fast track development and production. The permit has considerable potential for the exploration and development of more natural gas and exploitation would thence be by a series of low cost wells/producers each producing from 20-180Mm3 of gas. The produced gas is sold to local industry at locally agreed commercial rates, this allows COML to achieve production within a relatively short time scale. This affords the exciting prospect of providing an important long term continuing earnings contribution to Circle.
First Drilling Campaign
The first six well drilling campaign which finished in 2nd quarter 2009 has resulted in five commercial discoveries with the sixth well showing gas on the well logs and in borehole pressure MDT tests. This sixth well was successfully tested at part of the 2010/2011 drilling campaign.
Individually the wells flow tested at rates varying between 3.5 and in excess of 12MMscfd and initial reserve estimates prior to extended well testing indicate some 17.5bcf recoverable from the first drilling campaign as verified as Ultimate Recoverable Resources by a third party independent assessment.
Second Drilling Campaign
KAB-1
The 2010 drilling campaign started with the exploration well KAB-1, which was spud on 06 Sept. 2010 and reached a TD of 1400m MD in the Guebbas unit on 19 Sept. 2010. Significant gas shows were observed during the drilling of the well and wireline logging tools were prepared for formation evaluation. In reaching TD, multiple drilling problems were encountered and the open hole logging programme could not be completed. The well was suspended with a view to completing future well work to fully evaluate the gas producing potential of the prospect at a later date.
CGD-11
The CGD-11 exploration well was drilled in October 2010 and was a gas discovery in both the Main Guebbas target and the secondary Hoot zone. The well first tested gas at a sustained rate of 7.07 MMscfd/d on a 30/64” choke from the Hoot. The perforated Hoot zone of 1,078.5m to 1,092m has a calculated net gas pay of 5.9m. The Main Guebbas gas zone was then perforated from 905m to 910m and has a calculated net gas pay of 4.2m. This interval tested at a sustained rate of 6.22 MMscfd/d on a 30/64” choke. A thinner Upper Guebbas gas zone was also logged with 1m net gas pay and this zone will be tested at a later date. The well was completed as a potential producer.
KSR-10
The KSR-10 exploration well was drilled, logged and successfully tested in December 2010. The well is a gas discovery in both the Main Hoot target and a secondary Mid Hoot target. The well first tested gas at a sustained rate of 10.6 MMscfd/d on a 26/64” choke from the Main Hoot. The perforated Main Hoot zone of 8.4 metres at 1,736.6-1,728.2 m plus a 1.5 m zone at 1,720.0-1,718.5 me has a calculated net gas pay of 9.9. The Mid Hoot zone was then perforated and flowed gas at a sustained rate of 2.39 MMscfd/d on a 16/64” choke. The perforated Mid Hoot zone of 1,650.5-1,649.7 m plus 1,647.6-1,646.8 m has a calculated net gas pay of 1.6 m. Additional gas pay zones of 4.4 m, 3.1 m and 1.4 m in the Lower, Middle and Upper Guebbas were also logged. Testing of the Lower Guebbas encountered problems and was inconclusive. This Lower Guebbas zone together with the additional pay zones in the Middle and Upper Guebbas will be tested at a later date. The well has been completed as a potential producer.
ADD-1
The ADD-1 exploration well was drilled, logged and successfully tested in January 2011. The well is a gas discovery in both the Main Hoot target and the secondary Guebbas target. The well first tested gas at a sustained rate of 3.57 MMscfd/d on a 24/64" choke from the Main Hoot. The perforated Main Hoot zone of 4.4 metres at 969.6-974 metres MD has a calculated net gas pay of 4 metres. The Guebbas zone was then perforated and flowed gas at a sustained rate of 1.89 MMscfd/d on a 16/64" choke. The perforated Guebbas zone of 2.1 meters at 889.4-891.5 metres MD has a calculated net gas pay of 1.5 metres. The well has been being completed as a potential producer.
DRJ-6
The DRJ-6 exploration well has been successfully tested in February 2011. DRJ-6 was drilled in April 2009 and, as previously announced, not tested due to local logistical problems at the time of drilling. The Company confirms a gas discovery in the Base Guebbas target. The well tested gas at a sustained rate of 5.363 MMscfd/d on a 26/64" choke. The perforated Base Guebbas zone of 1.5 metres at 1,042.25 - 1,043.75 metres MD and 3 metres at 1,046.0 - 1,049.0 metres MD has a calculated net gas pay of 4.5 metres. The well has been completed as a potential producer.
KSR-11
The well designated KSR-11 spudded 11 March 2011 and targeted the Hoot and Guebbas formations . The targets were similar to those previously proven successful in KSR-8 and KSR-10. The Company confirmed a gas discovery in the Intra Hoot target. The well tested gas at a sustained rate of 4.0mmscf/d on a 16/64" choke with a calculated net pay gas pay of 11.6 metres within a perforated zone at 1761.2 -1779.1 metres MD. The Mid and Base Guebbas zones at shallower depth with calculated net gas pay zones of 4.1 and 5.5 metres respectively will be tested a t a later date following production and depletion of the Intra Hoot producing zones. The well has been completed as a potential producer. This was the successful fifth and final well of the 2010-2011 drilling campaign.
Going Forward
Wells in production are flowing at some 1.5-2.5 MMscfd with the flow rate constrained by the existing pipeline and the demand by local industry. Further infrastructure from the area to local industry in Kenitra is now under construction and additional wells will be hooked up for revenue, once the new pipeline is installed. This new 8 inch line will be capable of exporting up to 23.5 MMscf/d and will allow further increase in gas delivery with the concomitant additional revenue.
Additional 3D seismic is underway; to enable Circle Oil to further define additional drilling targets on the Sebou block.
Production start-up from Sebou was in October 2008 and gross production through end February 2011 was 35.7MMm3 (1.26bcf).
An independent third party assessment conducted for Circle Oil in April 2010 valued the most likely ultimate recoverable resources from the Sebou permit at 17,5bcf (recovery factor 87.5) and an upside of 24.7 bcf (recovery factor 95%) excluding out own internal estimates of gas produced. This third party assessment was repeated in June 2011 and the new estimate of most likely (P50) URR of gas is 30.6 bcf. This, together with our own internal estimate of gas production and resources remaining to be produced in areas not included in the report of 1.5 bcf, gives a total of 32.1 bcf (gross) URR for the Sebou Block. This represents an increase of gas resources of 83.5% over the figure of 17.5 bcf. The upside (P10) third party URR is 41.7 bcf (gross) which together with our own internal estimate of resources in areas not included in the report of 1.5 bcf gives a total of 43.2 bcf (gross) for 2011.