Aurelian Oil & Gas making good progress, to spud first Siekierki well in Poland in June 2010

Aurelian Oil & Gas PLC (AIM: AUL) announced that it will drill the first multi fracced horizontal well at its flagship project, the Siekierki gas field in Poland, in June 2010, and that the first Bieszczady exploration well in the Carpathian Thrust Fold belt is scheduled to be drilled in October.

The comments came in an operational update in which the Europe-focused exploration & production group reported it is making steady progress against all its targets.

At Siekierki, construction of the wellsite for Trzek-2, the first horizontal well, is close to completion. The wellsite is 2 kilometres to the southeast of Aurelian's Trzek-1 well which was drilled, fracced and tested gas at 7.5 million standard cubic feet a day (MMscfd) in 2007.  In Trzek-2, a vertical pilot will be drilled through the reservoir to obtain core and log data and a horizontal well sidetracked up to 1500 metres back towards Trzek-1.

The rig which will be used for Trzek-2 will be released by the current operator at the end of May 2010 allowing a Siekierki spud in late June 2010 as planned.

It is planned to drill Trzek-3 as a similar horizontal multi fracced well after the completion of Trzek-2. Trzek-3 will be drilled 2 kilometres to the southwest of Trzek-2. The drilling service contracts have been awarded. In addition, a number of proposals are under evaluation for the provision of fracture stimulation services contractor, and Aurelian expects to award the contract in four to eight weeks.

Work on the development of the pilot plant and flow lines continues smoothly. It is expected that orders for the nitrogen rejection unit and compressor, which have the longest lead time, will be placed early in June. The Environmental Impact Assessment and technical input to support Planning Approval will be submitted in June, with approvals expected in September. This should then allow a construction permit to be issued by year end to allow construction to start early in 2011.

Recently completed reservoir modelling of the Trzek-2 area indicates potential recovery at the upper end of the 16.5 to 28.6 billion cubic feet (bcf) range estimated by Gaffney Cline & Associates (GCA) in December 2009 when Aurelian was allocated a mid case contingent gas resource of 346 bcf.

The Siekierki project is located in the Poznan licences, which are 100 percent held by Energia Zachód, a company owned 90 percent by Aurelian and 10 percent by Avobone NV. Energia Zachód is operator of the Siekierki project.

At Bieszczady in Poland, interpretation of the 281 kilometres 2D seismic programme undertaken in 2009 is now complete.  A series of prospects have been identified in addition to those identified by GCA in its December 2009 report where Aurelian was allocated a mid case prospective oil resource of 89 mmbbls.  A prospect will now be selected by the group for drilling in the fourth quarter 2010 and an announcement made in July providing more details of the selected prospect.

Interest holders in Bieszczady are operator Polskie Gornichtwo Naftowe i Gazownictwo (51 percent), Aurelian subsidiary Energia Bieszczady Sp. z o.o. (25 percent) and Eurogas Polska Sp. z o.o. (24 percent).

Aurelian is currently evaluating tenders for a comprehensive seismic programme in the second half of 2010 to be undertaken on the three following licence areas in its Southern Permian Basin and Carpathian Thrust Fold Belt Core Areas.

The Kalisz licence is located on a Rotliegendes trend which lies south west of Aurelian's Siekierki structure and contains a number of producing fields with much higher well productivity than Siekierki.  Aurelian has reprocessed existing 2D seismic data and acquired a further 250 kilometres of 2D seismic in 2008.  The current 80 kilometre 2D survey is designed to detail a lead, Stawizyn, identified by the 2008 survey, to which 24bcf of prospective resources was allocated.  Operator Aurelian Oil and Gas Poland Sp. z o.o. holds 50 percent in Kalisz, GB Petroleum PLC 40 percent and Avobone Poland BV 10 percent.

The two adjacent licence areas Cybinka and Torzym are located on the southern flank of the Polish Zechstein Basin in an area of carbonate (dolomite) reef development. Existing discoveries and reprocessed 2D seismic data has indicated the presence of reef build ups in this area. Aurelian will now obtain up to 300 square kilometres of 3D seismic in the third quarter of 2010.  Both blocks may contain analogues to the largest oilfield in the Central Lowlands of Poland, the Lubiatow complex.

Drilling at Cybinka and Torzym is expected late 2011/early 2012 and will be targeting oil and gas prospects of between 20-40 million barrels of oil equivalent.

Cybinka and Torzym are both operated by Aurelian Oil and Gas Poland with a 35 percent interest, GB Petroleum has 25 percent in each, Avobone Poland has 10 percent and S.N.G.N Romgaz S.A. 30 percent.

The final seismic programme planned for Poland is to concentrate on Karpaty East  in the North Carpathian Thrust Belt.  Oil and gas fields have been discovered in sandstone reservoirs of mainly Eocene and Oligocene age. The area of the survey lies to the south west of an oil discovery by RWE.  A structure Mszana Dolna, containing two prospects in overlapping thrust sheets has been defined using reprocessed seismic. Both prospects could be targeted by one well and Aurelian has been allocated a mid case prospective oil resource of 236 mmbbls The 150 kilometre 2D survey is designed to firm up a drilling location for the second half of 2011.

Interests in Karpaty East are Aurelian Oil and Gas Poland as operator with 80 percent and Polskie Gornichtwo Naftowe i Gazownictwo holding the remainder.

On the Brodina Block in Romania, additional testing of the Voitinel discovery has now commenced, with a flow test is now underway.  The results of the fracture stimulation and flow test on the 1650 sand are expected in the week commencing May 17.  The result of the flow test on the 1400 sand is expected to be reported in June 2010.
The reprocessing of the current seismic data to incorporate the data obtained in Voitinel-1 and remap the Voitinel-Solca trend is expected to be completed by the end of June 2010.

A contract has been signed with a Romanian seismic contractor for a 60 kilometre programme of 2D seismic principally to detail the Solca prospect and its relation to Voitinel and Paltinu. The programme is expected to be acquired in August 2010 with results in mid October 2010.

Interests in the Brodina block are Aurelian Oil & Gas (Romania) SRL with 33.75 percent, S.N.G.N. Romgaz S.A. with 37.50 percent and Europa Oil & Gas SRL 28.75 percent.

Elsewhere in Romania, at rig mobilisation to Climauti-1, a commitment well in the Suceava Block, has commenced. It is expected to spud later in May 2010 and drill to a target depth of 600m to evaluate two Sarmatian sands identified on seismic.  The well is targeting approximately 2 bcf of recoverable gas reserves and if successful will be tied back to Aurelian's Bilca Gas Processing Facilities.

Interests in the Suceava Block are Aurelian Oil & Gas (Romania) SRL with 50 percent and Regal Petroleum PLC (AIM: RPT) 50 percent.

Aurelian, together with its partners, has also signed a contract with a Romanian seismic contractor for a comprehensive seismic acquisition programme covering the Brodina, Bacau and Cuejdiu blocks. 

At Bacau, work will commence in mid May 2010, completing early June, on a 70 kilometre 2D seismic survey (44 kilometres on Bacau North and 26 kilometres on Bacau/Lilieci). This survey will be interpreted by mid August 2010 and it is hoped that it will further define prospects for drilling in the future. To date a number of leads with a total potential for 67 bcf of gas-in-place have been identified.

At Cuejdiu, work will commence in mid June 2010, completing early July, on a 130 kilometre 2D seismic survey on this Block. To date a number of gas leads amounting to approximately 92 bcf have been identified on the licence.
Interests in the Bacau North block are Aurelian Oil & Gas (Romania) 41 percent, S.N.G.N. Romgaz  40.0 percent and Europa Oil & Gas SRL 19 percent.

Interests in the Bacau Lilieci block are Aurelian Oil & Gas (Romania) 60.0 percent, S.N.G.N. Romgaz 40.0 percent.
Interests in the Cuejdiu block are Aurelian Oil & Gas (Romania) 45 percent, S.N.G.N. Romgaz 37.50 percent and Europa Oil & Gas SRL 17.5 percent.

Aurelian also announced that JKX (Bulgaria) Limited,  the operator of the B1-Golitza licence in Bulgaria has advised that a spud date of mid Q3 2010 is planned for the first of two wells in a drilling programme with the second well planned for mid Q4 2010.

After farming in, Sorgenia is earning a 30 percent interest in the licence and is now paying 40 percent of the costs of the first two wells up to a cap of US$4.5 million. The 10 percent drilling  'promote' will be split 6.67 percent for the benefit of Aurelian's wholly owned Bulgarian subsidiary, Balkan Explorers (Bulgaria) Limited, and 3.33 percent for the benefit of JKX.

The first well in the programme, SOS, will test a potential 20-30 bcf prospect at 1,500 metres, updip of the depleted Stary Oryahovo gas field, discovered in the 1960s with results expected by the beginning of October 2010. The second well, S54, will also be testing a potential 20-30 bcf prospect at a depth of 600 metres with results expected by the end of Q4 2010.

The percentages in the block are JKX (Bulgaria) Limited 40 percent, Aurelian subsidiary Balkan Explorers (Bulgaria) Limited with 30 percent and Sorgenia International with 30 percent.

Finally, in Slovakia, 261 kilometres of 2D seismic on Aurelian's three licence areas was acquired during 2008 and 2009 and is currently being processed and interpreted.  This process continues to highlight additional prospective leads in addition to the Smilno exploration prospect where Aurelian was allocated a mid case prospective gas resource of 408 bcf.    A further 150 kilometres of 2D seismic will now be acquired in Q3 2010 with the objective of defining a prospect for drilling in H2 2011.

Interests are 50 percent for operator Aurelian Oil and Gas Slovakia, JKX Oil and Gas PLC with 25 percent and S.N.G.N Romgaz with 25 percent.