CALGARY, ALBERTA, February 14, 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.
FUTURE OUTLOOK: In 2013 the company’s capital budget is expected to be approximately $6.0 million to be financed entirely from existing cash flow. Average production is expected to average 1,725 boe/d, an increase of approximately 700 boe/d over 2012.
Sea Dragon is continuing to fully exploit its existing assets and expand its operations in Egypt while seeking new high impact opportunities in the MENA region and sub-Saharan Africa.
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 10,350 boe/d gross (1,035 net). Currently producing wells include seven at Al Amir SE field, two at Al Ola and four at Geyad. Cumulative production from the NW Gemsa Concession has now exceeded 10.4 million barrels of 42 degree API Crude oil.
The gas conservation project is now complete and solution gas conservation and incremental liquids production commenced on February 12, 2013. Preliminary volumes are 7.2 mmcf/d (720 mcf/d net) of sales gas, 150 bpd (15 bpd net) of condensates and 38 tons (3.8 net) of LPG’s/day.
Water injection is ongoing with four injectors currently operating at Al Amir SE Field and one injector at Geyad Field. Current total injection rates are approximately 14,500 bwpd. Cumulative injection to date is 6.6 million barrels at Al Amir SE and 1.6 million barrels at Geyad.
Al Amir SE-14 ST#2 Well:
This development well was spud on November 26th with the objective of appraising the Shagar and Rahmi reservoirs between the Al Ola-1x and Al Amir SE-12ST wells. The second side track hole was successfully drilled to its total depth of 10,000 feet and encountered net oil pays in both the Shagar and Rahmi reservoirs with 16 feet and 13 feet respectively.
Beyond the drilling of Al Amir SE-14, future plans at NW Gemsa include the drilling of three additional water injectors and one producer in 2013, after which the rig is expected to be farmed out.
Total 2013 capital expenditures in NW Gemsa are expected to be US$ 30 (3 net) million and total gross production is expected to average 10,000 (1,000 net) boe/d.
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.
Short term and within the next two months, the company plans to conduct an acid stimulation treatment in the Gamma #1 well and a work over and recompletion operation in the Shukheir Bay #5 well. With success these operations could result in a production increase of 100-200 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 415 bopd. Sea Dragon is the sole owner and operator of the concession.
Total 2013 capital expenditures in Shukheir Marine are expected to be US$ 1.0 million and total production is expected to average 470 bopd.
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 well was completed in December 2012 and placed on an extended production test. Production rates averaged 120 to 250 bopd. The well is currently shut in awaiting a bottom hole pump replacement.
As a result of the successful completion and testing of the well, a Development Lease was recently granted by the Petroleum Ministry.
Once the development plan is granted, an appraisal/development drilling program will commence which could involve the drilling of up to three new wells.
Total 2013 capital expenditures in Kom Ombo are expected to be US$ 4 (2 net) million and total gross production from existing wells is expected to average 510 (255 net) bopd.
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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