CALGARY, ALBERTA, March 7, 2013 – Sea Dragon Energy Inc. (“Sea Dragon” or the “Company”) (TSX VENTURE: SDX) is pleased to announce the following operational update for its recent work activities in Egypt.
The Al Amir SE-14 ST2 well was completed in the Rahmi sands and tested at 3,486 bopd. The well is now on production at 1,333 bopd resulting in total gross oil production from the NW Gemsa Concession increasing to 9,600 bopd and 11,420 boepd including solution gas and natural gas liquids.
NW GEMSA CONCESSION
The NW Gemsa concession is located onshore on the west side of the Gulf of Suez, approximately 300 km southeast of Cairo. Two main oil fields are producing light oil, the Al Amir SE field along with the Al Ola extension to the south and the Geyad field to the north. Sea Dragon has a 10% working interest in the NW Gemsa Concession with Vegas at 50%, as operator and Circle Oil PLC with 40%.
Current production from the Al Amir SE and Geyad fields is approximately 9,600 bopd gross (960 bopd net). Total production, including solution gas and natural gas liquids, is approximately 11,420 boepd gross (1,142 boepd net). The concession has eight current oil producers at Al Amir SE field, two at Al Ola and five at Geyad. Cumulative production from the NW Gemsa Concession has now exceeded 10.6 million barrels of 42 degree API Crude oil.
Water injection is ongoing with three injectors currently operating at Al Amir SE Field and one injector at Geyad Field. Current total injection rates are approximately 18,000 bwpd. Cumulative injection to date is 6.9 million barrels at Al Amir SE and 1.7 million barrels at Geyad.
Al Amir SE-14 ST2 Well:
This development well has now been completed in the Rahmi sands and placed on production at 1,333bopd using a 28/64” choke. The well was spud on November 26th and is located in the southern part of the Al Amir SE field, 738 meters NW of the AASE-12 ST surface location. The well objective was to appraise the Shagar and Rahmi sands for production. The AASE-14ST2 well was successfully drilled to a total depth of 10,000 feet and encountered 16 feet of net pay in the Kareem Shagar sand and 13 feet of net pay in the Kareem Rahmi sand. The Rahmi sand was perforated in the interval 9680-9695 ft MD and flowed at 3,486 bopd and 3.18 mmscfpd of gas at 764 psi WHFP, on a 48/64” choke.
Geyad-4 ST2 was drilled as an infill well in November 2011. The well encountered thin and tight Rahmi sand. Initial production was 300 bopd with a high oil rate decline but with no increase in water cut and was eventually shut-in January, 2013.
Inordertorestoreandenhancewellproductivityafracturestimulationwasconducted. Thestimulation was successfully completed and as of February 22, 2013 the well has been placed back on production at 750 bopd at 750 psi WHFP and 24/64” choke.
Al Amir SE-16 Well:
The AASE-16 well was spud February 28, 2013 and is a planned water injection well targeting the Kareem Shagar and Rahmi sands. The purpose of this well is to add another water injection point in the field, which will improve sweep efficiency and maximize oil recovery. The well is located approximately 860 m NW of the AASE-6 surface location and 310 m SW of the AASE-10 surface location. The well is currently drilling below 2,500 feet and is projected to reach a total depth of 10,800 feet in the Upper Rudeis Formation.
Beyond the drilling of Al Amir SE-16, future plans at NW Gemsa include the drilling of two additional water injectors and one producer in 2013.
SHUKHEIR MARINE CONCESSION:
The Shukheir Marine Concession is located in the shallow offshore waters of the Gulf of Suez approximately 300 km southeast of Cairo. Following the acquisition of 100% interest in the concession which contains both the Shukheir Bay and Gamma oil fields, Sea Dragon began a comprehensive review of the upside potential believed to still exist in both fields.
Shukheir Bay #5 Well Work-over:
The SHB-5 well produces from the Upper and Lower Rudeis sands within the Shukheir Bay Field. The well began production in 2006 and has produced over 1.1 MMbbl of oil to date. The well operates under a jet pump artificial lift system and recently averaged over 380 bopd. A work-over was successfully completed to replace a corroded tubing string and the well is now back on production cleaning up kill fluid.
The company continues to plan an acid stimulation treatment in the Gamma #1 well which may add 100 bopd.
Exploratory drilling opportunities may also exist in the Gamma concession, prospecting the prolific Nubia Formation and in the Shukheir Bay field in the Upper and Lower Rudeis Formations.
Current production from the concession is 260 bopd. Once work-over fluids are recovered from the SHB#5 well, production from the Concession is expected to be restored to its pre work-over levels of some 500 bopd. Sea Dragon is the sole owner and operator of the concession.
KOM OMBO CONCESSION
The Kom Ombo Concession is located onshore in the southern part of Egypt some 1,000 km south of Cairo. It contains the Al Baraka and the newly discovered W. Al Baraka oilfields, producing light oil from multiple reservoirs. Sea Dragon owns a 50% working interest and is a joint operator of the Kom Ombo Concession with Dana Gas owning the remaining 50%.
West Al Baraka #2 Well:
The West Al Baraka development lease has now been approved by the Egyptian Government. The lease covers an area of 184 km2 and was granted based on the Abu Ballas discovery from the West Al Baraka-2 well. A bottom hole pump change (rod pump) was recently conducted. The well is now producing and continues to clean-up.
The well was completed in December 2012 and placed on an extended production test. Test rates averaged 120 to 250 bopd.
Plans are to monitor production from West Al Baraka-2 and then commence an appraisal/development drilling program which could involve the drilling of up to three new wells.
Current production from the Al Baraka field is approximately 500 gross (250 net) bopd.
Certain statements contained in this press release constitute “forward-looking statements” as such term is used in applicable Canadian and US securities laws. These statements relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, statements concerning the 2012 drilling and capital expenditure programs of the NW Gemsa and Kom Ombo Concessions and the results referenced or implied herein should be viewed as forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact and should be viewed as “forward-looking statements”. All reserves information contained herein as well as the net present value of such reserves should be considered as forward looking statements. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, costs and timing of exploration and production development, availability of capital to fund exploration and development and political, social and other risks inherent in carrying on business in Egypt. There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release.
Forward-looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and the Corporation undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law. Although Sea Dragon has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Actual results may differ materially from those currently anticipated. See Sea Dragon’s Annual Information Form for the year ended December 31, 2011 for a description of the risks and uncertainties associated with the Company’s business, including its exploration activities. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
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