TransAtlantic Petroleum Ltd. (TSX:TNP) (NYSE:TAT) has provided initial production results of the Goksu-3H, the company’s first horizontal producing well in Turkey.
The Goksu-3H exploration well (100% working interest) was recently completed as TransAtlantic’s first horizontal producing well in Turkey.
The Goksu-3H began flowing naturally on October 22, 2012 after approximately 36 hours of jetting. TransAtlantic has flowed the well on chokes ranging from 19/64″ to 24/64″. The well’s flowing tubing pressure has stabilized between 185 and 205 pounds per square inch (“psi”) with a stable shut in casing pressure of approximately 500 psi.
To date, the well has recovered approximately 3,000 barrels (“bbls”) of oil and 10,000 bbls of water (approximately 65% of the drilling fluid lost during drilling operations). Average oil cut has ranged between 20% and 40% with daily production between 350 and 500 bbls of oil. The production rate has been restricted to allow flowing tubing pressure to remain in the 200 psi range, similar to the conditions maintained with the Goksu-2 exploration well that was completed in February 2012.
N. Malone Mitchell, 3rd, Trans-Atlantic’s chairman and CEO, stated, “As this is a new completion method for the country, and the method utilized on the Goksu-3H may or may not be optimal, water to oil ratios may change, for better or worse, when the volume of drilling fluid lost during drilling is recovered. Long-term decline rates for this completion method and this reservoir are not known at this time. We are certainly pleased with the early production results and will closely monitor the well before projecting the ultimate outcome.”
3Q Production, Activity
Oil and natural gas sales during the third quarter of 2012 averaged 4,168 thousand barrels of oil equivalent (“Mboe”) per day with crude oil accounting for sixty percent of total volumes. Gas sales during the third quarter of 2012 were impacted by reduced demand during the Ramadan religious holiday in Turkey. During the quarter, TransAtlantic and its subsidiaries spudded nine gross wells, completed 17 gross wells and executed fracs in 10 wellbores. The Company’s 7-day average net production rate as of October 21, 2012 was approximately 4,366 net boe per day, including approximately 10.4 million cubic feet (“MMcf”) per day of natural gas and approximately 2,628 bbls per day of oil..
Molla Field Area
In addition to the Goksu-3H activity noted above, TransAtlantic also began completion operations on the Bahar-1 exploration well (100% working interest) during the third quarter of 2012. The Bahar-1 is expected to undergo fracture stimulation of the Bedinan formation during the fourth quarter of 2012.
Selmo Field Area
TransAtlantic has stimulated 10 wells in Selmo field since the frac crew arrived on location in mid-September 2012. Early results during flowback are encouraging, with the first seven wells showing an average increase in production of 45 bbls of oil per day. At least four additional wells are expected to be stimulated after the Bahar-1 fracture treatment is completed.
Arpatepe Field Area
In the third quarter of 2012, TransAtlantic began completion activity for the Arpatepe-6 well (50% working interest). The well started producing in mid-October 2012 at an initial gross rate of approximately 200 bbls of oil per day. The Bati Arpatepe-1 well (50% working interest), which was drilled and funded by Aladdin Middle East, Ltd., the operator of the Arpatepe license, did not find commercial quantities of hydrocarbons and has been plugged and abandoned.
TransAtlantic has recently spud the Durakoy-1 exploration well (50% working interest) on the Idil exploration license just north of the Syrian border. The surface location of the larger Ebyat Anticline prospect is located at a higher elevation and is expected to spud during 2013, after winter weather conditions subside.
During the third quarter of 2012, TransAtlantic and its partners completed drilling the Alibey-1H, our first horizontal operation in Turkey. Completion techniques for this well are currently being evaluated and are expected to commence during the fourth quarter of 2012.
Northwestern Turkey (Thrace Basin)
Terkirdag Field Area
TransAtlantic and its partners stimulated five wells during the third quarter of 2012, with initial peak production rates that averaged approximately 0.8 MMcf of natural gas per day (41.5% working interest).
Based upon the results gathered during the proof of concept program, TransAtlantic and its partners have designed an initial 88-well development program for the Tekirdag Field Area that will begin during the fourth quarter of 2012 and proceed as a two-rig drilling program into 2015. Gross well costs are expected to range between $2.0 million and $3.0 million, depending upon total depth and completion design.
Gross expected ultimate recovery under the program is expected to exceed 70 billion cubic feet (“Bcf”) of natural gas.
TransAtlantic resumed drilling the Konak-1 exploration well during the third quarter. After encountering drilling difficulties, the well was sidetracked. The company has run intermediate casing to approximately 6,700 feet, but may have to suspend operations before reaching total depth in preparation for winter weather conditions.
TransAtlantic completed the initial planned acquisition of the Sivas Basin 2D seismic and aeromag data, which Shell Upstream Turkey B.V. co-funded. Trans-Atlantic has extended the seismic data acquisition program in the Sivas Basin and expect to complete this additional data acquisition in the fourth quarter of 2012.
Transatlantic Petroleum, an international energy company engaged in the acquisition, development, exploration and production of oil and natural gas in Turkey, Bulgaria, and Romania, has finalized its partnership with Shell for a joint seismic program in the Sivas Basin of central Turkey.
N. Malone Mitchell, 3rd, TransAtlantic’s chairman and CEO, stated, “We are pleased to have Shell join TransAtlantic in exploring the complex geology of the Sivas Basin. This region is underexplored but has the potential to hold meaningful accumulations of hydrocarbons. We welcome the knowledge, technical capabilities and commitment that Shell brings to the project and look forward to working with Shell’s team in reviewing the seismic and aeromag data, collection of which has already begun.”
With modern 3D seismic, re-entry into shallow wells, fracture stimulation possibilities and the potential for horizontal drilling all provide upside potential to the company’s assets in Turkey, Mitchell previously told OGFJ.
The Sivas Basin, noted Global Hunter Securities (GHS) analysts in a note to investors March 21, is a highly complex geologic setting with minimal exploration to date. For this reason, bringing in a partner with experience in a wide variety of settings like Shell is a definite plus. Under terms of the agreement signed with Shell Upstream Turkey BV, Shell will co-fund a 2012 TransAtlantic program to collect 1,000 kilometers of 2D seismic data and approximately 8,000 kilometers of airborne gravity gradiometry and magnetic data in Turkey’s Sivas Basin, where TransAtlantic holds exploration licenses covering approximately 1.6 million acres.
The agreement provides an option for Shell to farm in on the leases after it assesses the data collected. If Shell accepts the option, GHS analysts expect it would be for over 50% of the position that, following recent government approval of an extension on the licenses, calls for two wells by the end of 2013.
While terms of the deal were not disclosed, GHS analysts note that Trans-Atlantic is budgeting $15 million for seismic this year, or 12% of the full 2012 budget. Because the budget includes the Sivas shoot and reflects the Shell contribution, the partnership announcement has no affect on 2012 guidance, they concluded.
Natural Gas Pricing
Effective October 1, 2012, Botas Boru Hatlari Ile Petrol Tasima AS, Turkey’s state-owned pipeline company, increased residential and industrial natural gas pricing by approximately 10%. At the current exchange rate of approximately 1.8 Turkish lira per United States dollar, the company expects to receive approximately $9.50 per thousand cubic feet of natural gas produced.
October 31, 2012