Transeuro Energy Corp. provides an update on its drilling operations in Ukraine on the Karlavskoye 101 well and provides details on the related financial conditions of the Joint Venture Agreement recently entered into with RAG Rohöl-Aufsuchungs Aktiengesellschaft (RAG).

On well Karlavskoye 101, casing has been set above the main reservoir target at 2,923m. Drilling has continued and has currently reached the middle of the target reservoirs at 3,311m, with repeated gas kicks and oil shows seen in the upper reservoirs. Intermediate logs were run at 3,174m over the top two target reservoirs and indicated a presence of hydrocarbons. The Company now anticipates drilling down through the deeper four targets to a depth of 3,550m and expects to reach total depth during the second quarter.

Under the terms of the Joint Venture Agreement, RAG will pay a 75% share of all past drilling cost of the Karlavskoye 101 well, up to a maximum of $US11 million. For drilling costs in excess of US$11 million RAG shall only pay its 50% share. With these payments for Karlavskoye 101, plus contributions for inventory and past seismic RAG will pay approximately US$9.5 million on closing. Then following success at Karlavskoye 101, the parties envisage drilling a second appraisal well, Karlavskoye 102.

'Karlavskoye' is a large gas condensate field located in the western area of Crimea, discovered in 1961. It contains eighteen wells drilled from the 1960's to 1990's that have tested gas to surface from most of the wells. As a result of the 2D seismic acquired in 2007, the 'discovered resources' attributed to the Karlavskoye field by Fekete Associates Inc. under the Canadian 51-101 reporting standards has increased to a mean estimate of 474 billion cubic feet of gas. Under the terms of the Joint Activity Agreement with the local government partner 'Crymgeologiya', Transeuro has 72% of the profits derived from the development of the Karlavskoye field. Upon closing of the JVA, Transeuro will hold 36% and RAG 36% of the profits.

Discovered resources are defined in the Canadian Oil and Gas Evaluation Handbook, "Discovered resources are those quantities of oil and gas estimated on a given date to be remaining in, plus those quantities already produced from, known accumulations. Discovered resources are divided into economic and uneconomic categories, with the estimated future recoverable portion classified as reserves and contingent resources, respectively. There is no certainty that it will be commercially viable to produce any portion of the resources."

Tags: Transeuro Energy Corp