CALGARY, May 25 /CNW/ - Cirrus Energy Corporation (TSXV: CYR) announces the following operational update regarding ongoing activities in our wholly owned subsidiary, Cirrus Energy Nederland B.V. ("Cirrus") in The Netherlands.
2010 Drilling Programme
M01-04 (Cirrus 47.5%, operator)
The first well in the 2010 drilling programme, the M01-04 exploration well on the M01-Delta prospect, has been drilled to a total depth of 3,880 meters. The primary Triassic reservoir target was encountered 15m shallower than prognosis and, although interpreted as gas-bearing on logs, was of significantly poorer quality than expected with low porosity and no measurable permeability. The well has been plugged and abandoned.
Total drilling time was 42 days (compared to an expected 50 days) with gross well costs of approximately C$15.4 million (C$7.3 million net to Cirrus). This is approximately 14% lower than the pre drill estimated well costs.
Partners in the well are the Dutch state participant, EBN B.V. (50%) and Energy06 Investments B.V. (2.5%).
M07-07 (Cirrus 42.75%, operator)
It is expected that the rig will be moved on Sunday, May 30 to the M07-A production platform to drill the M07-07 well. This deviated appraisal well will be drilled from the platform to a Jurassic sandstone target which was previously tested in the M07-05ST well drilled in 1996. The M07-05ST well encountered thin, poor quality Jurassic sands, approximately 2m net thickness and which tested gas at 1.2 MMscf/d, at the updip and thinned edge of a sedimentary wedge. The M07-07 well is designed to encounter the equivalent Jurassic sandstones in a down flank location where an increased thickness of sand is expected to be developed. Cirrus' internal estimate of chance of success is 57% with a most likely gross, unrisked, recoverable resource potential of 31 Bcf.
In the event of success, M07-07 will be completed as a production well and immediately tied-in to the existing M07-A field gas export infrastructure. Ongoing gas production from the independent, developed M07-A Triassic reservoir is expected to continue during the M07-07 drilling operations.
The M07-07 well has an estimated drilling time of 53 days to reach total planned depth of 4,185 meters (2,950m TVD). Estimated drilling cost (excluding the cost of completion and testing) is approximately C$17.8 million gross (C$7.6 million net).
Partners in the well are the Dutch state participant, EBN B.V. (50%), TAQA Offshore B.V. (5%) and Energy06 Investments B.V. (2.25%).
L11b-A07Z (Cirrus 25.5%, operator)
Work is currently underway to redesign the A07Z well and, subject to a final drilling plan and partner approval, the A07Z well is tentatively planned as the third drilling location in Cirrus' 2010 offshore drilling programme. The A07Z well will be drilled from the L11b-A production platform and is likely to utilize the upper section of the original L11b-A07 well, drilled and suspended in early 2010. If approved by partners, this well would be drilled in the second half of 2010 with first production expected in early 2011.
Partners in the well are TAQA Offshore B.V. (17.88%), Energy06 Investments B.V. (1.341%), EWE AG (13.4%) and EBN (41.9%).
MSG-03 (Cirrus 47%, operator)
The MSG-03 deviated well is planned to be drilled from an onshore surface location to test the offshore Q16-Alpha prospect. The primary reservoir target is a Triassic-aged Bunter sandstone in a structural closure mapped on 3-D seismic. Cirrus' internal estimate of chance of success is 65% with a most likely gross, unrisked, recoverable resource potential of 29 Bcf. Planning is well advanced with a rig site location identified near to Rotterdam and an option on a suitable land rig is being secured. Subject to final site and partner approvals, this well is expected to be spud in the third quarter, 2010.
The MSG-03 well has an estimated drilling time of 56 days to reach total planned depth of 5,050 meters MD. Estimated drilling cost (excluding the cost of completion and testing) is approximately C$15.1 million gross (C$7.1 million net).
Partners in the well are expected to be the Dutch state participant, EBN B.V. (40%), TAQA Offshore B.V. (10%) and Energy06 Investments B.V. (3.0%).
L08-D Field (Cirrus 25.5%, operator)
Gross production from the L11b-A06 well has averaged 6.6 MMscf/d in April 2010. At current lower production rates, the well is on a pulsed production regime due to liquid loading effects in the 4 1/2" production tubing. Consideration is being given to the installation of smaller diameter tubing to facilitate the lifting of liquids in the well.
Work continues on the design and overhaul of compression facilities on the L11b-A platform which, subject to partner approvals, may be available from end 2010.
M07-A Field (Cirrus 42.75%, operator)
Gross production in April 2010 has averaged 23.1 MMscf/d which has slightly exceeded the current contractual capacity of 21.4 MMscf/d at the third party processing platform L09-FF. The operators of the processing platform and the export trunk pipeline have indicated that additional capacity is potentially available and recent testing of the production well and facilities at gross rates up to 31.7 MMscf/d has been successfully completed. Commercial negotiations are underway to revise contractual terms to allow for increased production from the M7-A field which is expected to occur from mid 2010.
Gasterra Sales Contract
Cirrus is expecting to accept the new 2010 gas price formula as proposed by Gasterra the effect of which will be backdated to January 2010. This is further described in the second quarter financial statements available on SEDAR.
Cirrus' President, David Taylor, comments: "The results of the M01-04 exploration well are clearly disappointing, however, the well was drilled quicker than the planned schedule and at lower than budgeted cost. We look forward to executing the balance of the multi-well drilling programme where the wells are testing a variety of plays in fully independent prospects.
We are pleased with the recent higher rate production testing of the M7-A field where we anticipate significantly increased production rates and revenues in the second half of 2010 without requiring any additional investment.
Cirrus is fully funded for the balance of the planned drilling programme which combines exploration drilling with field appraisal. Two of these wells (M07-07 and L11b-A07Z) are to be drilled from production platforms and hence can be quickly and inexpensively completed for production."
Cirrus Energy Corporation is an international oil and gas company headquartered in Calgary and has approximately 93.4 million fully diluted common shares outstanding. Additional information about Cirrus and its business activities is available at www.cirrusenergy.ca and www.sedar.com.
This press release may include forward-looking statements including opinions, assumptions, estimates and expectations of future production, cash flow and earnings. When used in this document, the words "anticipate", "believe", "estimate", "expect", "intent", "may", "project", "plan", "should" and similar expressions are intended to be among the statements that identify forward-looking statements. Forward-looking statements are subject to a wide range of risks and uncertainties, and although the Company believes that the expectations represented by such forward-looking statements are reasonable there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to, the volatility of oil and gas prices, the ability to implement corporate strategies, the state of domestic capital markets, the ability to obtain financing, changes in oil and gas acquisition and drilling programs, operating risks, production rates, reserve estimates, changes in general economic conditions and other factors more fully described from time to time in the reports and filings made by Cirrus with securities regulatory authorities.
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SOURCE CIRRUS ENERGY CORPORATION
For further information: For further information: David Taylor, President and Chief Executive Officer, Glenn Gradeen, Executive Vice President and Chief Operating Officer, Cirrus Energy Corporation, Suite 208, 5 Richard Way, S.W., Calgary, Alberta, T3E 7M8, Canada, Website: www.cirrusenergy.ca, Telephone: (403) 216-5030, Facsimile: (403) 265-9530