portfolio------------------------------------------------------------------October 17, 2011
Hungarian oil and gas group MOL has announced that a crude oil discovery with the additional potential of associated gas has been made in Karak block, Pakistan. The Karak exploration block is located in North-West Pakistan in the southern vicinity of the MOL Pakistanoperated Tal block. The operator of the Karak Block is Mari Gas Company Limited (MGCL). MOL Pakistan farmed into the block with 40% interest in 2008.
The Halini-1 well was spud on January 7, 2011. The well has been drilled upto a depth of 5,350 meters. During the initial short duration tests carried out, the well flowed at the average rate of 1,700 barrels/day crude oil of API gravity 26 at 32/64" choke size.
The flow rates from the well are expected to increase with further testing and stimulation treatment which is planned to be conducted shortly. To determine the size of the prospect, the consortium is planning to drill additional wells to delineate the exact extent, size and reserves potential of this oil discovery, MOL said in a statement on the website of the Budapest Stock Exchange (BSE) late on Friday.
"Following six remarkable discoveries in our Tal block we are proud to announce the successful drilling in the Karak block. This discovery made in close collaboration between the professionals of MGCL and MOL Pakistan validated our upstream strategy focusing on organic growth," commented Sándor Fasimon, Executive Vice President of the Exploration and Production Division.
The Halini-1 well was spud on January 7, 2011. The well has been drilled upto a depth of 5,350 meters. During the initial short duration tests carried out, the well flowed at the average rate of 1,700 barrels/day crude oil of API gravity 26 at 32/64" choke size.
The flow rates from the well are expected to increase with further testing and stimulation treatment which is planned to be conducted shortly. To determine the size of the prospect, the consortium is planning to drill additional wells to delineate the exact extent, size and reserves potential of this oil discovery, MOL said in a statement on the website of the Budapest Stock Exchange (BSE) late on Friday.
"Following six remarkable discoveries in our Tal block we are proud to announce the successful drilling in the Karak block. This discovery made in close collaboration between the professionals of MGCL and MOL Pakistan validated our upstream strategy focusing on organic growth," commented Sándor Fasimon, Executive Vice President of the Exploration and Production Division.
The announcement is definitely positive, but the preliminary estimate on the 1,700 barrels/day crude oil is not earth shattering. MOL’s share of 680 barrels/day is a mere 0.5% of its total production (although - as we could see in the case of the Makori-East-1 well - the preliminary estimate could prove considerably below the real potential at later tests.
"This is a positive development, especially given MOL’s high equity participation (40%) in the project. Adjusting for MOL’s stake, the initial production at Halini-1 represents roughly 0.5% of the firm’s expected hydrocarbon production in 2011. However, the quality of the crude oil (API 26) is below that of Brent (API 38) and Urals (API 32)," commented Péter Császár, analyst at KBC Securities.
"Following successes in the Tal block, this latest discovery gives us great confidence that Pakistan could be a significant growth hub in MOL’s international portfolio. Indeed, MOL may be able to increase its production from 4.7kbpd in 2010 to a peak level of 20-22kbpd by 2016. We also note that the attractive fiscal terms in Pakistan mean this could be another valuable discovery for MOL. We expect a positive market reaction to the news," he added.
"Following successes in the Tal block, this latest discovery gives us great confidence that Pakistan could be a significant growth hub in MOL’s international portfolio. Indeed, MOL may be able to increase its production from 4.7kbpd in 2010 to a peak level of 20-22kbpd by 2016. We also note that the attractive fiscal terms in Pakistan mean this could be another valuable discovery for MOL. We expect a positive market reaction to the news," he added.