Circle Oil the new Cairn Energy

Old but worth a read.

Better than the drivel above.Circle Oil, the Irish-based independent, which is quoted on London’s AIM, has just announced that it has been awarded the licence for Block 52 in the Arabian Seas off the southern coast of the Sultanate of Oman. The Exploration and Production Sharing Agreement licence is for a nine year period divided into three 3 year exploration phases. During the first phase Circle Oil will carry out reprocessing and re-interpretation of all existing data as well as the acquisition of 6,000 kms of new reconnaissance 2D seismic data. More detailed surveying will be carried out upon evaluation of this new data prior to any drilling campaign.

Block 52, covering an area of over 100,000 sq km, is an area that is a deepwater province and has had very little exploration carried out to date. All previous work focussed on the shallow, near shore waters where there were minor hydrocarbon shows in two wells drilled in 1979 and 1991.

Circle’s exploration efforts will concentrate on the unexplored, deeper water areas of the licence where the company believes there is potential for a number of new hydrocarbon plays.

Mr Jack Keyes, chief operating officer at Circle says: “The area is vast; there could be three hydrocarbon basins out there. There’s potential at all kinds of zones from tertiary to basement.”

Last October Circle was granted an Exploration and Production Sharing Agreement for Block 49. The 15,400 sq km block lies onshore in the southwest of the country, immediately west of the Shell-operated Block 6, which pumps 600,000 barrels of oil a day, while to the north lies the Saudi Arabian border and the Rub al Khali desert and oil basin.

Circle finds this licence very attractive. The company’s director of corporate development John McKeon says: “We love the geology because we understand it.”

By this McKeon is referring to the similarities between this new acreage in southern Oman and its vast exploration concession in northern Namibia. Both blocks are in pre-Cambrian basins - also found in Eastern Siberia and the Sichuan Basin of South Central China - with the attractive structures lying some 5,000 metres down. Although Block 49 has seen previous drilling, by former owners Japex and BP, none of the wells penetrated this deep said McKeon.

Circle has an initial six years to explore the acreage. During the first 36 months it has committed to review all the existing data and undertake aeromagnetic, aerogravity, 2D seismic and 3D seismic surveys. It then has two 18 month extensions to undertake further exploration work. Including drilling.

Circle Oil is now one of the largest licence holders in Oman. It has gained its chance because Oman, which is politically stable and, rarely for that part of the world, offers good production sharing terms, is keen to shore up its own reserves and production numbers. It became a significant producer in the 1990s, when production hit around 900,000 barrels a day. But production has dropped and is now around 700,000 barrels a day. Many of the older fields in the north of the country are now in decline, so Oman has invited companies in for further exploration.

For Circle, Oman is a chance to repeat its exercise in Nambia, of doing preliminary and early work in large largely unexplored acreage then getting a major to farm in for drilling.

Circle is expecting to hear imminently from the China Shine group about drilling in the Namibia acreage which lies in the Ovambo Basin about 500 kms north of the capital Windhoek. This is a vast tract of land covering 146,000 sq km, an area more than half the size of the UK. Last year Circle undertook an aerogravity survey at a cost of £415,000 over the eastern portion of the acreage. The survey defined six deep basins, four of which have been selected for additional survey work. Circle hopes that this further survey and seismic work will move a number of new prospects to drill ready status in the near future. China Shine has agreed to put up US$50 million towards early work and could, in time, commit US$1 billion for drilling.

Elsewhere, Circle holds a 100 per cent interest of a prospecting licence in the Republic of Ireland’s Celtic Sea, to the southeast of the producing Kinsale Head and Ballycotton gas fields. It also has an application outstanding for a large tract of exploration acreage in the South West Caribbean Basin off the northern coast of Panama

OilBarrel 14/9/05