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Iona Energy Inc. has been advised by the operator of the Tyne Gas field that the Ensco 80 jackup rig has commenced operations to side-track the T5 production gas well.
Iona owns a 20%interest in both Trent and Tyne gas fields with an option to increase interest in both the fields to 37.5%. The average realized gas sales price for the summer month of June 2012 was $8.61 per Mcf.
Drilling operations are planned to side-track the original T5 well that flowed at peak production rates of 25 MMscf per day from the Carboniferous Ketch reservoirs located within the Tyne North compartment of the field. Pressure testing of the T5 well conducted in March 2009 has indicated that the targeted reservoir pressure behind pipe is 5,126 pounds per square inch.
The objective of the T5Z sidetrack is to relocate the high water-cut vertical production well up-structure and complete with a high angle reservoir section. It is anticipated that the standoff from the identified gas water contact will be increased and gas production re-established at a target rate of 20 MMscf per day (consistent with Iona’s reserve auditors’, Gaffney Cline & Associates, 2011 Year-End 2P Projection), representing more than US $20 million per year of net sales revenue at current gas prices.
The duration of the drilling operation and re-completion for onset of production is estimated to take 90 days. Iona’s net cost exposure is capped at £21.2 million (approximately $32.9 million).