Verenex Contracts Two Drilling Rigs For Libya’s Area 47
Canada’s Verenex Energy on 12 April said it had contracted two drilling rigs for work in Libya’s Area 47, a concession that Verenex and partner Medco Energi Internasional of Indonesia won in early 2005 in Libya’s first upstream licensing round (MEES, 21 March 2005 and 7 February 2005). Both companies hold a 50% interest with Verenex as the operator. Verenex said the rig contracts had been approved by the Area 47 Management Committee (Verenex, Medco and Libya’s National Oil Corporation – NOC). The first rig was contracted from Oil Drilling and Exploration (Borneo), a subsidiary of Calgary-based Ensign Energy Services, and is expected to be available to spud the first well late in 3Q 2006. The second rig was contracted from KCA Deutag and is slated to arrive in 1Q 2007. Verenex said the two rigs would enable it to drill more than 30 wells over the next four years. Both are capable of drilling to the maximum target depth of 12,000ft and both contracts include an initial two-year term with two one-year extension options exercisable by Verenex. The contract gives Venerex the right to assign the rigs to third parties if circumstances warrant and with permission of the contractor.
In December last year, Verenex and Medco approved a 2006 budget of $48mn for Area 47. The money will cover a work program that includes drilling four exploration and appraisal wells based on existing seismic and well control. The cost of each well is put at around $8.5mn. A further $2mn will be spent on a well workover and production test on a suspended well in an undeveloped oil discovery. In late 2005, Verenex began a seismic acquisition program covering 480 sq km of 3D seismic and 1,500km of 2D seismic that is to finish by 3Q 2006 at a cost of $7.5mn. A further $5mn will be spent on other geophysical and geological studies, technical and administrative support from Calgary (where Verenex is based), local office capital and other Libyan administrative expenses. The exploration phase of the Area 47 exploration and production-sharing agreement (EPSA) is for five years and includes the drilling of three wildcat exploration wells.
