Pınarhisar Licence

PINARHİSAR  LICENCE (AR/MER/4133)

 

Merty Energy  had been awarded with AR / MER / 4133  namely  “PINARHISAR LICENCE” on 12 07 2006. The award of the licence made the assets of Merty Energy richer and stronger because of the high prospectivity of the Thrace Basin. Thrace Basin being the major gas producing basin in Turkey is a well known area of success for Merty Energy. Since 2005 Merty had alot of experience in finding pools and reservoirs of natural gas in the Thrace Basin.

With its well deserved self confidence Merty  had made the necessary technical studies, investment and strategy which finally gave its first successful result as the gas observed in Ballıca-1 well drilled in 2011.

Highlights

95-99% methane
No sulfur or sourness

Shallow reservoir (300-1800 m.)
High porosity (17-25%) and permeability (0.1-25md)
High potential recoverable gas

Easy market access and low cost surface facilities
Established infrastructure with proxy  to pipelines
Ready Sales contract
Brent referenced pricing mechanism
Quick PB period and high NPV

Current Status
Merty Energy  is  the 100% holder of the licence 4133, PINARHISAR. After the observation of gas at the Ballıca-1 well the next step is the long term testing of the well to define the commerciality and the reserve amounts at the well. The second step that would follow the testing will be the drilling of Hızır-1 well on the defined HIZIR prospect.  Gas market in Turkey is a very demanding market due to the growing need of gas and the electricity (gas generated). It is even possible to sell any amount of gas produced via CNG companies however the target will be the planning and construction of a gas gathering and compressing facility.Expected  reserves  in the licence are in the range of 1.7 billion m3 recoverable  with an estimated value of  close to 500  million USD in 10 years.Turkey has an attractive tax/royalty system with exploration incentives
LICENSE OWNERSHIP

On july 2006 Merty Energy and Petrako were jointly awarded with the Pınarhisar licence (AR/PTK-MER/4133).  The share distribution was  Merty 50% and Petrako 50% to start with. In 2009  Petrako transferred  all of its shares in the Pınaehisar licence making Merty have 100% of the licence. This made Merty Energy move more steadily and invest for  the licence.

Works performed
a) Detail Geological study
b) Reprocessing   and Interpretation of the existing seismic lines

c) Acquiring  202 line  kms  of 2D seismic  line in the licence

d) Processing and interpretation of  231 km seismic  data

e) Drilling Ballıca-1 well. With gas observed during drilling.

Testing  Ballıca-1  well  Hızır-1  will be drilled  on the Hızır prospect which is evaluated as a high potential area.
LICENSE TERMS AND HISTORY

Turkey has attractive fiscal terms, under a tax royalty system, with a gross royalty of 12.5 percent and  corporate tax rate of 20 percent. Each license has a term for four years and is renewable twice for a period of two years per renewal. Exploitation licenses are granted for a period of 20 years, and may be extended twice, each extension maximised to 10 years.

The natural gas sales  are regulated  by EMRA (energy market regulatory authority) within the context of Gas market law  and the petroleum law  giving the local production the priority.

The gas prices developed in the market freeley within the context of competition within the gas wholesales companies and the distribution companies as well as the big consulers which the gas producer has the right to choose  to sell from.

There are several mechanisms where the sale price of gas  is determined by.

a. A small percentage discount from the local state price (380-410 USD per 1000 sm3)
b. 5-10% discount from Brent defined price (390-410 USD)
c. Or mechanisms that  companies create within the similar context.

Technical

Thrace basin is  the most known gas bearing basin in Turkey. It is actually one of the many Tertiary sedimentary basins that has very well known source rocks and very efficient reservoir rocks. The fields in the basin produces  about 90% of the gas produced in Turkey since 1985.

Commercial quantities of 31-37 API gravity waxy oil and 40-55 API condensate is also produced in the basin. Although the oil production is substantially low. Acknowleding that the deeper parts of the basin is not explored yet as well as the 60 % of the basin still awaits for further exploration,  much more potential stays  untouched throughout the basin.

The sedimantary succession presents major fluvial and deltaic sandstones, shales and minor fractured shallow marine limestone which is generally taken as a key horizon in the seismic interpretation of the basin with up to 9000 m of sedimentary deposits.

The basement is a Paleozoic-Mesozoic crystalline complex.

Source rock intervals are Early Eocene, Upper Eocene  and Oligocene respectively.

The reservoirs are deltaic and fluvial sandstones of high porosity (15-25%) and permeability (0.1-25 darcys), with intra-formational shales alternating with sandstone forming the several layers of seal, as well as the Pliocene shales and mudstones that create regional seal in the area.

Initial Results

The Pınarhisar area of the Thrace basin is well known being the cradle of the first commercial  gas production from Middle Eocene clastics to the south of the licence 4133 (where we name it as Pınarhisar licence). On the other hand the reefal limestones of the Middle-Upper Eocene  (Sogucak Formation) have been proven to be oil bearing in the Kuzey Osmancik Devecatagi  Oil field.

Hamitabat gas field is the first gas discovery in Thrace basin and has produced over 5 billion sm3 of gas and still producing.

There are two old wells drilled in the licence area. They are Asilbeyli-1 and Asilbeyli-2 wells. The wells have tested oil in the reefal limestones.

While the wells had been drilled by limited seismic they are not in the best position to produce oil.

On the other hand  shallower   zones (500-700)  in the Ballıca-1 well  gas   had been observed. Incoming WO and flow tests will quantify the gas reserves in the well and give important data for the development of the area. The Ballıca structure has a big areal distribution as big as 2.45 km2.

The expected recoverable gas in Ballıca is expected to be 706 million sm3.

The detailed seismic interpretation lead to some other prospects in the licence. The southernmost prospect which is  Hızır-1 will be drilled in may 2012. The probable reserves calculated at Hızır prospect reaches up to  620 million sm3.