CALGARY, Sept. 16 /CNW/ - Cirrus Energy Corporation ("Cirrus")
(TSXV: CYR) is pleased to provide the following operational update regarding
our activities in The Netherlands. The first exploration well in a six well
drilling programme has been spudded on the Q14-Alpha prospect and good
progress continues on our two operated field development projects, M1-A and
Q14-3 Exploration Well (Cirrus 30%)
The Cirrus operated Q14-3 well on the Q14-Alpha prospect was spudded on
15th September using the Noble Lynda Bossler drilling rig. Total depth of the
well will be approximately 2750 metres sub-sea. The drilling duration is
estimated as 35 days. A further 15 days is likely to be required if testing is
The Q14-Alpha prospect is a large fault block interpreted and mapped on
3D seismic data. The primary reservoir targets are Triassic-aged Bunter
sandstones with secondary reservoir potential in Permian-aged Zechstein and
Rotliegend sandstones. Cirrus' internal estimate of combined most likely,
gross, unrisked, recoverable resource potential in the Triassic is 125 bcf
with a further potential 50 bcf in the Permian. In order to test the Triassic
at an optimal location, however, it is not planned to deepen well Q14-3 to the
Partners in the well are TAQA Offshore B.V. ("TAQA") (30%) and the Dutch
state participant, EBN B.V. ("EBN") (40%). Under a previously announced farmin
arrangement, TAQA is funding Cirrus' share of gross well costs up to
(euro)12.5 million in the event of a dry hole, or (euro)16.5 million if the
well is tested. Expenditures in excess of these limits will be funded by
partners according to their post-farmout working interests.
M7-A Development Project (Cirrus 42.75%)
Fabrication of the M7-A platform deck is mechanically completed and
onshore commissioning is underway together with certification. The base frame
of the support monopile has also been fabricated. It is currently expected
that the complete platform will be installed offshore during late September.
The 13 km, 6" pipeline from the M7-A platform location to NAM's L09-FF
process platform has been laid, trenched and buried. Pressure testing has been
successfully completed. Tie-in modifications on the L09-FF platform are
currently underway and installation of the riser from the pipeline to the
platform is planned to be completed in October.
The jack-up drilling rig Noble Lynda Bossler will commence drilling
operations at the M7-A platform when it has completed the Q14-3 exploration
well. Depending on whether there is testing or not at Q14-3, the rig is
expected to move to M7-A during either late October or early November.
Detailed review of the original suspended discovery well (M7-5ST) indicated
that there are significant well integrity concerns and, with a view to
reducing risk, our plan is now to drill a new development well (M7-A1) from
the M7-A platform with an expected drilling duration of 50 days. This is
longer than the originally planned re-entry and sidetrack and hence the
estimated gross well costs have increased to (euro)15.7 million from
Partners in the M7-A development are DSM Energie B.V. (5%), Energy06
Investments B.V. (2.25%) and EBN (50%). First gas from M7-A is expected around
the end of December, 2008.
M1-A Development Project (Cirrus 47.5%)
Fabrication of the subsea protection dome has been completed. Fabrication
of the subsea wellhead and high pressure protection system is underway.
Offshore installation and well related activities are currently planned for
the second quarter of 2009 when favourable weather is more predictable
although this timing also depends on securing acceptable commercial terms for
access to the existing 6" pipeline which would be used for export of the raw
gas to the G17-A process platform. Commercial discussions with the relevant
third parties are continuing.
Partners in the M1-A development are Energy06 Investments B.V. (2.5%) and
L8-D Field (Cirrus 39.729%)
Cirrus has entered into an agreement with Chevron Exploration and
Production B.V. to acquire its 48% operated interest in that part of the L8-D
Field that potentially extends in the L11b licence. The consideration for the
acquisition takes the form of an overriding royalty payable out of future
production revenues from the field and the drilling of one appraisal well.
Cirrus holds a 39.729% interest in the planned L8-D Unit and is operator.
Equity interest partners in the L8-D Unit are expected to be DSM Energie B.V.
(2.880%), Energy06 Investments B.V. (2.091%), EWE Aktiengesellschaft AG
(13.400%), and EBN (41.900%).
The L8-D Field was discovered by well L8-16x drilled in 2004. The well
was drill stem tested at rates up to 430,000 Nm3/day (16.1 MMscf/day) of gas
from a Rotliegend sandstone reservoir at a depth around 3850 metres. Water
depth at the location is 30 m. It is expected that an appraisal well will be
drilled on the L8-D Field in early 2009 with the Noble Lynda Bossler rig.
Cirrus currently has contracted the Noble Lynda Bossler jack-up rig for a
total of six firm wells. In addition, the following has recently been agreed
with Noble Neddrill International B.V. ("Noble") and Wintershall Noordzee B.V.
- Wintershall will use the Lynda Bossler for two additional firm wells
in the period May to July 2009 after which the rig will return to
Cirrus to continue with Cirrus' drilling programme.
- Noble has granted Cirrus two additional well slot options to be
exercised before December 31, 2008. If Cirrus exercises these
options, it would take Cirrus' firm well commitment to eight wells.
- Noble has granted Cirrus and Wintershall the option to extend the
Lynda Bossler contract for a further twelve months after the
completion of Cirrus' drilling programme with this option to be
exercised seven months before the expected end of Cirrus' programme.
The allocation of rig time between Cirrus and Wintershall for this
extension period has not been determined as yet.
This new arrangement provides all parties with the rig time required to
meet their near term drilling requirements plus access to the rig for
potential programme extensions.
Cirrus' President, David Taylor, comments: "Despite a very tight market
for materials, labour and equipment, Cirrus remains on track to achieve the
start of gas production in Holland around the end of calendar 2008. We look
forward to generating material production revenues in 2009 with gas prices in
The Netherlands remaining high as they are linked to trailing oil product
prices. As an example, $100 per barrel Brent corresponds to gas prices around
US$12.00 per thousand cubic feet.
The commencement of our operated multi-well drilling programme is another
exciting milestone in Cirrus' growth. This drilling programme will expose
shareholders to numerous opportunities for significant value creation
throughout the remainder of 2008 and most of 2009. It is important to note
that Cirrus has a strong balance sheet and is fully funded for the M1-A and
M7-A developments plus the planned drilling programme of appraisal wells on
both the K10-Bravo and L8-D fields and at least two exploration wells. Unlike
many junior companies in today's challenging environment, Cirrus is very well
positioned with an exciting prospect inventory, access to a drilling rig and
the funds required to execute its programme."
Cirrus Energy Corporation is an international oil and gas company
headquartered in Calgary and has approximately 76.1 million fully diluted
common shares outstanding.
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.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
For further information:
For further information: David Taylor, President and Chief Executive
Officer, Pamela Orr, Vice President Finance and Chief Financial 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.