Operations
CYGAM OPERATIONS:
TUNISIAN PERMITS:
Sud Remada Permit
In October, 2005, Cygam signed an agreement with Storm Ventures International Inc. to participate in an exploratory well on the Sud Remada permit. The block covers an area of 4,748 square kilometres (1,173,215 acres) and the company earned a 20% interest in approximately half of the permit by participating in the drilling of the Oum Zoughar 2 (“OMZ 2”) well. The Company has an option to earn a similar interest in the balance of the lands by paying 30% of the cost of a second well drilled in the northern half of the permit. Seismic interpretation indicated the presence of several structures of similar shape and size as producing structures in Silurian fields to the south (Oued Zar, Hammamouda, Hammamouda Nord, Larich and Adam).
The OMZ 2 well was drilled to a depth of 3,054 meters, and production casing was set to total depth. The existence of the seismic structure was confirmed and detailed log analysis indicated several intervals in the Ordovician and the Silurian as being prospective. Light oil was recovered on swab tests in the Silurian Acacus formation. Although very encouraged by finding oil in the structure, Storm and Cygam felt that the potential daily production rates without additional artificial stimulation would not justify the installation of a single well battery at this time. The well was therefore temporarily suspended, also because it was impossible to find a service rig to conduct cost effective additional completion operations.
Further exploratory activity on the five additional prospects identified on the very large Sud Remada block will be proposed after integration of all newly acquired data and discussions with Storm and the Tunisian authorities. Although disappointed with the lack of commercial success in the first well on the permit, we are encouraged that light oil recovered during completion confirms a significant northern extension of the Acacus play over a large portion of the Sud Remada block.