Melrose Resources discovers gas at Kavarna well on Bulgaria’s Galata block

Melrose Resources PLC (LON:MRS) announced an exploration discovery in the Galata block offshore Bulgaria, a new agreement to farm-down its interests in the Rhone Maritime concession offshore France and the commencement of seismic acquisition operations in the South East Mansoura concession in Egypt.

In a trading statement, the oil and gas exploration, development and production company said the  Kavarna East No.1 well in Bulgaria has been successfully drilled to test an exploration prospect approximately 10 kilometres to the east of the Melrose operated Galata field production platform. The new gas discovery lies in between two other recent discoveries, Kavarna and Kaliakra, which contain combined reserves of 74 billion cubic feet and are currently being developed using sub-sea production wells tied back to the Galata platform.

The Kavarna East No.1 well penetrated the top of the Paleocene reservoir interval at a depth of 2,753 feet and encountered a net gas pay of 89 feet with an average porosity of 29 percent. The preliminary reserves estimate for the discovery is 12 Bcf, in line with pre-drill estimates, and it is expected to be developed using a low cost tie-back to the Kavarna sub-sea well location.

The well encountered a gross gas column of approximately 130 feet and consistent with the other fields which have been discovered on the same geologic trend, the reservoir structure is thought to be filled with gas to the spill point. This provides further evidence that the regional biogenic gas source is substantial and that gas volumes may have migrated further north into the central area of the Galata block.

Melrose plans to acquire seismic over this area of the concession in 2011 to evaluate its prospectivity.

The Jupiter rig will now be used to install the sub-sea tree for the Kaliakra field development and may then be used to drill the Kaliakra East prospect. This well remains contingent, however, on confirmation that the seabed conditions at the well site will allow the jack-up rig to operate at the required water depth.

In France, Melrose currently holds a 100 percent working interest in the Rhone Maritime concession located in deep water offshore the Rhone Delta in the Mediterranean Sea.  The concession is largely unexplored and contains a number of different frontier exploration plays which require further evaluation with additional seismic data before drilling commitments may be undertaken.

In order to effectively progress the forward work programme, the company has identified the need to form a strategic partnership with an experienced deep water operator. Melrose has therefore entered into a Heads of Agreement with Noble Energy Inc (NYSE:NBL) under which the company will retain a 27.5 percent working interest in the block with Noble acquiring the balance and assuming operatorship.

In Egypt, the company has recently commenced the planned seismic acquisition programme in the South East Mansoura concession onshore the Nile Delta.  The programme will take approximately four months to complete and will comprise approximately 360 square kilometres of 3D seismic and 160 kilometres of 2D seismic data. 

The primary objective of the survey is to evaluate a geologic trend containing a number of Lower Cretaceous oil leads which have been identified on previously acquired 2D data and are estimated to have significant resource potential.

Melrose chief executive David Thomas said: "Kavarna East represents the third consecutive discovery for the company in Bulgaria and further supports our local exploration strategy to focus on areas close to the Galata platform where we can leverage the existing infrastructure. We will be moving forward to develop the discovery following the Kavarna and Kaliakra field developments which will come on stream over the next few months."