Country Information
Middle East:
Kurdistan
As a member of a consortium operated by Niko Resources, Groundstar entered into its first Production Sharing Contract ("PSC") with the Kurdistan Regional Government ("KRG" or "Government") for the exploration, development and production of petroleum resources in the 846 square kilometer Qara Dagh block in Sulaymaniyah Governorate of the Federal Region of Kurdistan, Iraq, on May 14, 2008. Groundstar has a 6% net participating interest.
The block lies on trend with existing discoveries, a portion of which covers a large unexplored 65 kilometer long by 6 kilometer wide surface structure with existing oil seeps. Of interest, Qara Dagh translates into Black Mountain.
The consortium operated by Niko has a 60% participating interest that is not subject to further dilution by the KRG. The Government will have a direct 20% interest carried exclusively by the consortium. The remaining 20% was assigned equally to Groundstar's partners, Niko Resources and Vast Exploration on September 22, 2009.
The obligations under the PSC included a onetime signature bonus and capacity building bonus paid to the Government within 30 days from the execution date of the contract. Annual contributions to personnel, training and technological funds established by the Government, as well as community support contributions are to be paid over a period of 15 months to assist with infrastructure projects in the area. The consortium will also be responsible for paying its proportionate share of certain production bonuses in the case of a commercial discovery. The remaining minimum work program obligations represent an exploration commitment which includes the acquisition, processing and interpretation of a minimum of 300 kilometers of 2D seismic data and drilling of one well during the first exploration period.
On January 18, 2010, the Corporation announced that AJM Petroleum Consultants completed an initial resource assessment of Qara Dagh block. AJM has estimated an un-risked best estimate of 2.7 billion barrels of petroleum initially in place as of December 31, 2009. This assessment was prepared by the operator on behalf of the consortium. The consortium, operated by Niko Resources, completed the award of contracts for supply and services required for drilling of the Qara Dagh - 1 well and two potential additional wells. The operator was also engaged in drilling a water well, well site and access road construction for the Qara Dagh - 1 well, which spud on May, 11, 2010.
Figure 1 Figure 1:
Qara Dagh Quickbird Image with Seismic Grid - In June 2009, the consortium completed the acquisition of 355 kilometers of 2D seismic over the surface structure that dominates the Qara Dagh block. Three potential drilling locations have been identified from interpretation of the seismic.
Figure 2 Figure 2:
Qara Dagh Depth Structure Map and Seismic Line QD09-13 -. The Qara Dagh -1 wildcat planned to drill to approximately 4,000 meters and could penetrate up to seven potential reservoirs in the Cretaceous, Jurassic and Triassic in a seismically closed structure of 100 to 140 square kilometers in area. Drilling of the Qara Dagh-1 well reached a total depth of 3,908 meters on May 18, 2011. The well has been log evaluated and a DST evaluation of the prospective zones began on June 7, 2011. Five DSTs were conducted during the evaluation program and no commercial hydrocarbon rates were achieved.
From the well data interpretation, and the significant spike in observed well bore pressures before the drilling stopped, it is believed that the well has potentially entered into the first 10 meters of the next reservoir, the Cretaceous-aged Kometan formation, which is one of the primary target zones previously identified. It is important to note that the Kometan formation is regionally known to be a naturally fractured reservoir that contains significant quantities of oil. Log data and drillstem testing suggest that the well is in a potential oil column through the entire Tanjero-Shiranish interval tested but lacks adequate reservoir for significant flow rates.
The forward plan is to deepen the well to approximately 4,150 meters to reach the Kometan and possibly the Qamchuqa formations.