TIDMNGP
RNS Number : 2635K
Niche Group (The) PLC
13 July 2011
Embargoed: 0700hrs 13 July 2011
The Niche Group plc
("Niche" or the "Company")
Update Re. Independent Evaluation of Hydrocarbons
Further to the announcement of 6 July 2011, Niche, the AIM
listed investment company with interests in gas exploration and
development activities onshore Turkey, has received Operator
approval for the publication of an Executive Summary of the first
independent evaluation of the recoverable hydrocarbons (the "CPR")
within Oman Resources Ltd's ("Oman Resouces") assets in Turkey.
Niche holds loan notes convertible into a 35.7% shareholding in
Oman.
The Executive Summary is available for viewing on the Documents
section of the Company's website at.
http://www.nichegroupplc.co.uk/documents.aspx
A summary appears below:
This report comprises an independent evaluation of the
recoverable hydrocarbons for the interests in the AR/ARR/4077
licence in Konya and in the AR/ARR/4394, AR/ARR/4395 and
AR/ARR/4396 licences in Hatay. The assets evaluated comprise
development opportunities, exploration prospects and leads with
prospective resources. The working interest that Oman Resources
holds in the licences is 50%.
Oman Resources has farmed in to licences that are owned and
operated by ARAR PETROL VE GAZ URETIM PAZARLAMA AS ("ARAR"), which
has retained the remaining 50% interest. ARAR is a Turkish
integrated upstream oil company, focused on exploration and early
stage production, with more than 2 million acres under licence. Its
strategy is to obtain and develop licences in proven hydrocarbon
provinces with discoveries in Turkey that have until now been
neglected, either because of a historic lack of focus on gas
assets, or because of difficulty to commercialise. ARAR's
organisation allows it to quickly move an asset from exploration to
delivery of gas into the market.
The volumes reported in the summary tables are those within the
licence attributable to the production share of Oman Resources. The
individual prospect descriptions provide the gross whole field
volumes and the volume distribution range for the resources for
each opportunity. Where appropriate, gas resources have been
converted to an oil equivalent using 5.8 Mscf = 1 boe.
Reserves and Resources
( )
Reserves and Resources Net to Oman Resources
---------------------------------------------------------------------
Proved + Probable
2P 2C Best Estimate
-------------------- ------------------ ----------- --------------
Contingent Prospective
Volume Gas (Bscf) Reserves Resources Resources
-------------------- ------------------ ----------- --------------
Hatay Licences 12.6 - 39.9
-------------------- ------------------ ----------- --------------
Konya Licence - 57.3 52.2
-------------------- ------------------ ----------- --------------
Total Gas (Bscf) 12.6 57.3 92.2
-------------------- ------------------ ----------- --------------
Total Hydrocarbons
(MMboe) 2.2 9.9 15.9
-------------------- ------------------ ----------- --------------
Hatay, Turkey
The licences are based in the Iskenderun basin, formed during
the late Tertiary and which is tectonically complex. A number of
exploration wells have been drilled on the three blocks and
numerous hydrocarbon shows have been seen. The main reservoir
objectives are the early Pliocene Aktepe fluvio-deltaic sandstones,
the Upper Miocene Upper Kizildere delta plain sandstones, the
Middle Miocene Lower Kizildere pro-delta sandstones and the Middle
Miocene Horu carbonates.
In block 4396, ARAR's Hamam-1 well encountered high quality gas
in the Upper Kizildere formation in 2011 at a maximum flow rate of
6.8 MMscf per day and is currently test producing the gas and
delivering this into the local market. The Yesiltepe-1 well,
drilled in 2003 by Amity Oil, tested 97% methane gas in the Lower
Kizildere Miocene sands at a rate of 1.7 MMscf per day. ARAR's
interpretation of the seismic is reasonable and confirms earlier
work done by Amity Oil, which shows a folded structural high
elongated northeast-southwest and cut by transverse faults. The
Yesiltepe and Hamam wells are in the southwest end of the
structure, separated from the northeast end by a fault.
In block 4395, all historic exploration wells encountered gas
and oil, but mainly due to use of inadequate techniques, none of
these tested hydrocarbons at commercial rates. The main objectives
are the Miocene Kizildere sandstones and the shallower Pliocene
Aktepe sandstones. ARAR spudded the Kastal-1 well in December 2010,
but drilling was suspended after a gas blow-out at 300 m. ARAR is
finalising its testing of this well and intends to start test
production. Drilling to the deeper target has been postponed. In
block 4394, the Cumular-1 well drilled in 1989 into the Ayseler
prospect, which is a shallow tilted fault block, encountered
hydrocarbons in sandstones at the base of the Upper Kizildere. The
well was not tested (as the target then was oil rather than gas)
and is not classified as a discovery. ARAR spudded the Ayseler-1
well in December 2010 but drilling was suspended after the well
reached a depth that was sufficient to fulfil licence obligations
and the rig was moved to a higher priority location. Drilling of
Ayseler-1 is planned to resume in Q4 2011.
The net reserves and un-risked prospective resources remaining
as of 1st January 2011 attributed to Oman Resources in Hatay are
shown in the following tables.
Net Reserves (Bscf)
---------------------------------------------------------
Asset Equity 1P 2P 3P
---------------------------- ------- ---- ----- -----
Licence AR/ARR/4396
---------------------------- ---------------------------
H-1 segment,
Upper Kizildere reservoir 50% 1.9 9.2 19.9
---------------------------- ------- ---- ----- -----
Y-1 segment,
Basal Upper Kizildere
reservoir 50% 0.9 3.4 6.9
---------------------------- ------- ---- ----- -----
Total Gas (Bscf) 2.8 12.6 26.8
------------------------------------- ---- ----- -----
Total Hydrocarbons (MMboe) 0.5 2.7 4.6
------------------------------------- ---- ----- -----
Net Prospective Resources (Bscf)
--------------------------------------------------------------------
Chance
Asset Equity Low Best High of Success
------------------------ ------- ----- ----- ----- ------------
Licence AR/ARR/4394
------------------------ ------------------------------------------
Ayseler Prospect,
Upper Kizildere
reservoir 50% 2.2 7.7 15.1 25%
------------------------ ------- ----- ----- ----- ------------
Licence AR/ARR/4395
------------------------ ------------------------------------------
Kastal area,
Aktepe reservoir 50% 0.4 1.8 3.9 36%
------------------------ ------- ----- ----- ----- ------------
Kastal area,
Upper Kizildere
reservoir 50% 1.5 4.9 9.7 40%
------------------------ ------- ----- ----- ----- ------------
Kastal area,
Lower Kizildere
reservoir 50% 1.0 3.2 6.2 40%
------------------------ ------- ----- ----- ----- ------------
Licence AR/ARR/4396
------------------------ ------------------------------------------
Hammam NE segment,
Upper Kizildere
reservoir 50% 3.8 15.4 32.4 35%
------------------------ ------- ----- ----- ----- ------------
Yesiltepe NE segment,
Basal Upper Kizildere
reservoir 50% 1.7 6.9 14.3 35%
------------------------ ------- ----- ----- ----- ------------
Total Gas (Bscf) 10.7 39.9 81.5
--------------------------------- ----- ----- ----- ------------
Total Hydrocarbons (MMboe) 1.8 6.9 14.0
--------------------------------- ----- ----- ----- ------------
Senergy has identified additional prospective resources above
those mentioned and quantified above, including prospects in the
Gokdere-1 structure, the Top Lower Kizildere structure around the
Gokdere-5 well, the Kizildere structure around the Gokdere-6 well
and leads north of Osmaniye. None of these have been further
qualified or quantified due to current lack of data, but they all
have gas shows with the Gokdere-5 well also recovering oil from
Miocene sands and potential for oil form deeper levels.
Konya, Turkey
The 4077 licence is based in Central Anatolia in the Tuzgolu
(Salt Lake) basin and is part of a broader set of ARAR licences in
the basin. Exploration in the area started in the late 1950's. As
the focus was on oil, the gas discoveries were not commercialised
and there is currently no hydrocarbon production in the basin.
The basin is tectonically complex and has a salt layer in the
Eocene. There is also evidence of volcanic activity in the
Palaeocene. The main reservoir objectives are Basal Oligoscene
Kochisar sandstones, Basal Eocene sandstones, Palaeocene Kirkkavak
turbidite sandstones and Palaeocene Caldag Carbonates, of which the
first two vary in thickness and may lack lateral continuity.
Additional pay intervals were seen in the Yassipur in the
Karapinar-2 well. The deeper Haymana sandstones are likely to
extend into 4077 and tested oil in the Bezirci-1 well in block 4074
immediately North of block 4077.
The reservoirs in the Caldag and Kirkkavak horizons show a
prominent structural high in the west controlled by north-south
faults and a structural nose to the east, with west to east
trending faults. Five wells have been drilled to date on block
4077: Karapinar-1, -2 and -3 and Gulhanim-1 and -2. Karapinar-3
missed the reservoir and all other wells have hit the east flank of
the reservoir and encountered hydrocarbons, with Karapinar-2
located just south of a compartmentalising fault. The limitations
in seismic and log data are reflected in the uncertainty in
reservoir quality and hydrocarbon presence, particularly away from
the closely spaced wells. Karapinar-2 reported a flow rate of 546
Mscf per day of good quality gas from basal Eocene sandstones. A
full well test is expected from Gulhanim-2 by Q3 2011.
The un-risked net contingent and prospective resources for
prospects attributed to Oman Resources in Konya are shown in the
following tables.
Net Contingent Resources (Bscf)
--------------------------------------------------------------
Asset Equity 1C 2C 3C Risk
------------------------- ------- ---- ----- ------ -----
G-1 segment,
Caldag Reservoir 50% 1.3 14.7 35.8 0.8
------------------------- ------- ---- ----- ------ -----
G-1 segment,
Kirkkavak Reservoir 50% 0.3 5.7 13.8 0.8
------------------------- ------- ---- ----- ------ -----
K-2 segment,
Kirkkavak Reservoir 50% 0.7 6.2 14.3 0.8
------------------------- ------- ---- ----- ------ -----
G-1 segment,
Basal Eocene Reservoir 50% 1.1 11.1 25.7 0.8
------------------------- ------- ---- ----- ------ -----
K-2 segment,
Basal Eocene Reservoir 50% 2.3 19.7 45.6 0.8
------------------------- ------- ---- ----- ------ -----
Total Gas (Bscf) 5.8 57.3 135.3
---------------------------------- ---- ----- ------ -----
Total Hydrocarbons (MMboe) 1.0 9.9 23.3
---------------------------------- ---- ----- ------ -----
Net Prospective Resources (Bscf)
-------------------------------------------------------------------
Chance Of
Asset Equity Low Best High Success
------------------------- ------- ---- ----- ------ ----------
K-2 segment, Caldag
Reservoir 50% 1.0 12.1 29.5 40%
------------------------- ------- ---- ----- ------ ----------
West & South segments,
Caldag Reservoir 50% 1.6 16.7 40.2 23%
------------------------- ------- ---- ----- ------ ----------
West & South segments,
Kirkkavak Reservoir 50% 0.3 7.6 18.1 20%
------------------------- ------- ---- ----- ------ ----------
West & South segments,
Basal Eocene Reservoir 50% 1.1 12.4 30.3 20%
------------------------- ------- ---- ----- ------ ----------
G-2 area, Kochisar
Reservoir 50% 0.5 3.5 7.9 17%
------------------------- ------- ---- ----- ------ ----------
Total Gas (Bscf) 4.6 52.2 125.9
---------------------------------- ---- ----- ------ ----------
Total Hydrocarbons (MMboe) 0.8 9.0 21.7
---------------------------------- ---- ----- ------ ----------
Additional oil and gas prospects and leads have been identified
in the Konya block, but these have not been quantified. This
includes condensate from the Caldag in G-2, which has been
produced, but for which yield could not be established, based on
the information available. Prospective resources can be identified
in the north-west and in the east of the block, but these cannot be
quantified. Finally, there is deeper oil potential in the Haymana.
The technically recoverable volumes presented in this report are
based on a review of the independent interpretations conducted on
the assets.
Reserves and resources are reported at estimated economic or
technical cut-off rates agreed with Oman Resources and are
otherwise derived according to the 2007 Petroleum Resources
Management System prepared by the Oil and Gas Reserves Committee of
the Society of Petroleum Engineers ("SPE") and reviewed and jointly
sponsored by the World Petroleum Council ("WPC"), the American
Association of Petroleum Geologists ("AAPG") and the Society of
Petroleum Evaluation Engineers ("SPEE").
The development plans for the four exploration licences include
additional seismic acquisition and processing on all blocks,
exploration and development drilling and the development of local
gas handling facilities, CNG bottling facilities and gas pipelines
into the transmission network. Due to the shallowness of the
reservoirs, the quality of the produced gas and the closeness of
the transportation infrastructure, the cost to commercialise the
gas is modest and relatively small resources can be commercially
produced and marketed. Test production from Hamam-1 has been
ongoing since April 2011 and ARAR has offered the produced gas into
the local CNG market.
The Turkish gas market has substantially increased in the last
decade. The vast majority of gas is imported with local production
accounting for only 2% of consumption in 2010. The Turkish oil and
gas infrastructure is adequately developed. Turkish wholesale gas
prices, petroleum regulation and fiscal regime are attractive for
local producers.
A cash flow analysis has been undertaken in respect of Oman
Resources' net attributable resources. The Net Present Value (NPV)
at 10% discount factor has been calculated for the Reserves and
Contingent Resources, on the basis of the development plans and the
related production profiles.
Net Attributable NPV (10%)
Reserves in $MM
----------------------------------------------
Proved, Probable
Proved Proved & Probable & Possible
------- ------------------ -----------------
22.2 65.2 117.0
------- ------------------ -----------------
Net Un-Risked Attributable NPV (10%)
Contingent Resources in $MM
-----------------------------------------
1C 2C 3C
---------- -------------- -------------
9.1 119.5 341.8
---------- -------------- -------------
Furthermore, the EMV for the 1C Contingent Resources is $4.3MM
and for the 2C is $92.6MM.
An NPV per Mscf value has been applied to the quantified
Prospective Resources, resulting in an un-risked NPV as per the
table below.
Net Un-Risked Attributable NPV (10%)
Prospective Resources
--------------------------------------------
NPV ($MM) Low Medium High
--------------- ------- --------- -------
Konya 8.7 99.3 239.2
--------------- ------- --------- -------
Hatay 42.9 159.7 325.8
--------------- ------- --------- -------
Total $MM 51.6 259.0 565.0
--------------- ------- --------- -------
Enquiries:
The Niche Group plc
Nigel Little or Alistair Stobie
Tel. +44 (0) 203 286 3350
M: Communications
Patrick d'Ancona or Ben Simons
Tel. +44 (0)20 7920 2340
Daniel Stewart & Co. Plc - Nominated Advisor and Joint
Broker
Oliver Rigby
Tel. +44 (0)20 7776 6550
Canaccord Genuity - Joint Broker
Charles Berkeley / Henry Fitzgerald-O'Connor
Tel: +44 (0) 20 7050 6500
This information is provided by RNS
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