Tunisia
Remada Sud
The Sud Remada Block is located onshore in the far southern region of Tunisia bordering with Libya to the east, approximately 100 kilometres southeast of the Mediterranean Sea shoreline. The Sud Remada Block, which is nearly 1.2 million acres in size, is contracted to CKE and its partners through a production sharing agreement between ETAP and certain third party contracting companies. CKE holds 86% of the contractor's share and is the designated operator of the Sud Remada Block.
The Sud Remada Block was initially awarded as a seismic option to CKE on April 20, 2004, for a two year term based on a work commitment requiring at least 200 kilometres of two-dimensional seismic data to be shot. In September 2005, the Sud Remada Block was converted to an exploration permit for a three year period with a commitment of one well targeting the Ordovician formation to a depth of 3,000 metres. CKE extended the initial term of the exploration period with no relinquishments for two-one year periods by committing to additional work on the block including seismic and the TT-2 well. CKE has applied for a third one year extension, with no relinquishment, with the commitment to drill an exploration well on the E1 Bell Structure. The Sud Remada Block has two renewal periods of two years, each with a corresponding one well drilling commitment. Two renewal periods are available of two years each both with the commitment to drill one exploration well. Under the first renewal, 20% of the acreage would be required to be relinquished and 14% under the second. A three year extension to each of the renewal periods is available with no additional relinquishment of acreage and a negotiated commitment.
CKE fulfilled its initial work commitment under the seismic option by acquiring 187 kilometres of twodimensional seismic data by re-interpreting over 1,000 kilometres of two-dimensional seismic data. Subsequent to the conversion to an exploration permit, the Oum Zoughar #2 well was spud on November 23, 2005. Subsequent to various testing and completion activities, the oil rates of the Oum Zoughar #2 well were determined to be too low to be economic. The well was subsequently suspended.
The TT-2 well at Sud Remada was spud on March 28, 2008, and drilled to a total depth of 1,500 metres on April 16, 2008. After various completion and testing activities, the well sustained flows of light oil (42 API) with some gas at approximately 250 bbl/d. The well was brought on production to a single well battery on long term test on March 22, 2009, at an initial rate of 225 bbl/d. Three pressure build-ups have been performed since the well first came on production with no pressure depletion indicated. The produced oil is trucked to La Shikra for sale and for loading onto a shipping tanker.
CKE has been working closely with ETAP (the concession holder) to agree to a plan of development for the TT Field on the Sud Remada Block. The plan of development is expected to be submitted for formal approval to the Directorate General of Energy on or before July 22, 2010. The plan of development will be conducted in phases with the next phase being the drilling and completion of the TT-3 well likely later in 2010. Together with the plan of development, CKE is working with ETAP to come to terms as to the production concession area within the exploration permit. CKE has applied for a large production concession including the entire TT field as well as a number of other prospective fields within the Sud Remada Block.
Hammamet Offshore
The Gulf of Hammamet Offshore Permit was awarded on September 23, 2005 with a primary term of five years. The Gulf of Hammamet Offshore Permit has a second renewal period that, if exercised, will expire on September 22, 2016 and, if renewed, CKE will relinquish 14% of its acreage interest in the block. The concession consists of a total area of 4,676 square kilometres. The work commitment was to shoot 200 square kilometres of two-dimensional seismic data, reinterpret 2,000 kilometres of two-dimensional seismic and to drill one well to the Miocene level. CKE has reprocessed in excess of 2,000 kilometres of two-dimensional seismic data and has shot 415 square kilometres of three-dimensional seismic data in addition to 250 kilometres of two-dimensional seismic data. CKE has identified several exploration targets in the Gulf of Hammamet, the primary of which is the Fushia prospect. The Fushia prospect is fully covered with new three-dimensional seismic data. The proposed Fushia-1 well (FSH-1) will meet the drilling commitment under the exploration permit. FSH-1 well was spud on or about May 18, 2010.
The Fushia prospect is located in about 85 metres of water in the west-central part of the Gulf of Hammamet offshore exploration permit in the Gulf of Hammamet approximately 70 kilometres northeast of the port of Sousse.
CKE is the operator of the Hammamet Offshore Permit and has two other partners in the block; Cooper Energy and Rak Petroleum. Cooper Energy and Rak Petroleum are participating in the drilling of the FSH-1 well and CKE will retain an after earned interest of 35% and pay 8.5% of the costs associated with the FSH-1 well.
Due to the late arrival of the rig to drill the FSH-1 well, CKE has applied to the Tunisian authorities for an extension of the entire Gulf of Hammamet permit with no relinquishment of acreage from the permit. Negotiations are currently ongoing. Two optional renewal periods of three years each are available based on a commitment of at least one additional exploration well. Under the first renewal, 20% of the acreage would require to be relinquished and 14% under the second renewal. Each of the renewal periods can be extended by up to three additional years with no further relinquishments and a negotiated work commitment.
Jenein Centre
The Jenein Centre Permit covers an area of 312 square kilometres and lies on the north central area of the Ghadames Basin.
On November 16, 2007, CKE obtained the Jenein Centre permit as a prospecting licence. The permit is under the first phase of exploration that expires on October 14, 2014 and has two renewal periods of three years each with a commitment of one well for each renewal. CKE has two optional three year renewal periods available each with the commitment to drill one exploration well. The acreage relinquishment under the first renewal is 20% of the block and the second is 14%. Both renewal periods can be extended for three years with no additional relinquishments based on a negotiated work commitment. The initial work commitment under the prospecting license was to shoot 75 square kilometres of three-dimensional seismic and reinterpret 500 kilometres of two-dimensional seismic. During the year ended December 31, 2008, CKE shot 110 square kilometres of three-dimensional seismic data, 46 kilometres of twodimensional seismic data and reinterpreted over 500 kilometres of two-dimensional seismic data. Subsequent to fulfilling the terms of the prospecting licence, the prospecting licence was converted to an exploration permit on October 15, 2009 which has an initial term of five years. CKE's work commitment under the exploration permit is to drill a single well to a depth of 3,500 metres and to reach the Ordovician formation. CKE has contracted a rig to drill a 4,400 metres exploration well (JC#1) to test the potential of the Ordovician formation as well as the Acacus formation. The rig is currently being moved to the location and is expected to spud at the end of May 2010. If the evaluation results are successful, it is anticipated the well will be completed as a production well initially from the Acacus formation. The JC#1 well will be located in northeast corner of the Jenein Centre Permit in close proximity to other third party oil discoveries in the Acacus formation.
PA Resources AB is CKE's partner in the JC#1 well and may earn a 35% working interest in the well by paying for 70% of the costs associated with the JC#1 well. CKE will retain a 65% working interest in the JC#1 well by paying for 30% of the costs of the JC#1 well.
Adam Concession
The Adam concession is located onshore southern Tunisia approximately 370 kilometres south of Tunis in the hydrocarbon producing Ghadames Basin. CKE acquired a 5% non-operated interest in the producing Adam Concession from Talisman Energy Inc. effective January 1, 2009 pursuant to the acquisition of the shares of TRTL.
The Adam Concession is operated by ENI Tunisia B.V. ("ENI") which holds a 25% working interest in the concession.
For the month of February 2010, production from the Adam Concession was approximately 14,291 BOE/d (gross). Production is from ten fields; Adam, Hawa, Nour, Karma, Nadir, Mejda, El Azzel N, Iklil, Dalia and Janet. The producing zones include the Acacus, Tannezuft and Ordovician.
The oil produced from the Adam Concession is light sweet crude (42 API) and is priced at a slight premium to Brent. The gas is sold to the Tunisia utility company (STEG).
The oil and gas is transported to a facility at Oued Zar. The facility, which was initially built for other ENI operated assets, is operated by ENI and jointly owned by ENI, ETAP, Pioneer and CKE. Production from the Adam concession is currently partially constrained due to export pipeline constraints.
The expiry date of the Adam Concession is August 31, 2033.
Borj El Khadra Exploration Permit
A 10% non-operated interest in the BEK Permit (subject to an obligation to pay costs incurred, varying from 5% to 10%, depending on ETAP participation) was also acquired from Talisman Energy Inc. effective January 1, 2009 pursuant to the acquisition of the shares of TRTL. The BEK Permit is operated by ENI who retains a 50% interest in the permit. The other interest owner is Pioneer who has a 40% interest. To date, two exploration wells and one appraisal well have been drilled on the BEK Permit. The BEK Permit covers approximately 707,710 gross acres of land.
The BEK Permit is currently under its third renewal period which expires June 12, 2011. The BEK Permit has an extension period of two years and as such, may be extended to June 12, 2013 without any relinquishment.
Cosmos
The Cosmos production concession is located approximately 45 kilometres offshore northeastern Tunisia in the Gulf of Hammamet. The Cosmos production concession contains a number of separate fault blocks, the largest of these is the Cosmos Sud fault block. The Cosmos field is productive from the Birsa sand at a depth of 1,500 metres (true vertical depth subsea) in 120 metres of water.
The Cosmos reservoir was discovered in 1983 with the Cosmos South 1 (CMS-1) well. The oil is light sweet, high quality oil and is priced at Brent or a slight premium.
CKE initially acquired a 100% interest in the Cosmos production concession from two arm's length companies. This interest has subsequently been reduced to a 40% working interest in the field with ETAP having elected to participate for a 20% interest, and CKE having an agreement with a Singapore based company for a 40% interest. ETAP will be a full paying partner in the field development. The application to transfer the 40% interest to the new partner is being finalized and will be submitted to the Tunisian authorities shortly. CKE will remain the operator of the field.
A field development plan has been prepared and was approved in January 2009 by the Tunisian Energy Department. The plan of development consists of one production well being drilled and one injector well. Both wells are expected to be completed subsea and tied back to a lease floating production storage and offtake vessel (FPSO).
Under the Hydro-Carbon Law in Tunisia, exploration costs incurred on an exploration permit are eligible for cost recovery against the first concession to be put on production out of the permit. CKE has made application to have the prior expenditures made on the Cosmos South field recognized by the appropriate Tunisian authorities and credited accordingly. The application is currently under review. Once a ruling has been obtained, CKE will make a final decision regarding the development of the Cosmos South field.