Share Price
The Company holds interests in licences granted by the Russian Government in respect of the following seven blocks of property located in the Kamchatka Peninsula covering nearly 3,690,900 gross (3,281,755 net) hectares which represent its project areas. The Company holds a 90% interest in OJSC LukinCholot, the Company's Russian operating subsidiary for the Tigil, Icha and Urginskaya licences. The four other exploration licences are held by Russian operating subsidiaries that are 100% owned by PetroKamchatka.
- Pustaretskaya
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Pustaretskaya Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Pustaretskaya 553,700 100% 1 September 2014 1 Well 800 CloseThe Pustaretskaya Block is currently 100% held by the Company through its 100% interest in CJSC Kingi-Exploration, a Russian Operating Company. This licence was acquired on September 21, 2009 and will expire on September 1, 2014. The Pustaretskaya Block is located in the northern portion of the west Kamchatka basin adjacent to the Sea of Okhotsk. Pursuant to the Pustaretskaya licence, the Company, through CJSC Kingi-Exploration, must start 800 km of seismic data acquisition before September 14, 2011 in order for the licence to remain in good standing. The Company is also required to spud one exploration well prior to September 14, 2012 to be able to hold the licence to term. Since this licence was recently acquired, the Company has not yet planned for any exploration work over the next 12 months.
- Urginskaya
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Urginskaya Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Urginskaya 213,400 90% 15 February 201 1 Well 200 CloseThe Company, through its 90% ownership interest in LukinCholot has an indirect 90% net beneficial interest in the Urginskaya Block, which covers 213,400 gross hectares. The Urginskaya Block is located onshore in the Koryakia Region of the western side of the Kamchatka peninsula, adjacent to the northern boundary of the Tigil Block. The Urginskaya licence is valid until February 15, 2013 but requires the Company to shoot a minimum of 200 kilometres of seismic by January 29, 2010. This has not been done and the remaining period between the date hereof and that deadline is insufficient to meet this requirement. A 200 km seismic program for the Urginskaya Block is planned for the summer of 2010, dependent upon receiving an amendment to the terms of the licence from FASU. PetroKamchatka will make a formal request to FASU in November 2009 for an extension to meet this commitment. Such extensions have been granted in the past in respect of both the Tigil and Icha Blocks. In the event an extension is not granted, the Company will be in default of its obligations under the Urginskaya licence and the Urginskaya Block will be forfeited. While such forfeiture is not desired by the Company, little expenditure has been made on the block to date and no prospects have been established at this time. If an extension is granted for the seismic program, the Company plans to carry out this program in the summer of 2010 or winter 2010-2011. Provided that an attractive prospect is defined by the seismic program, the Company plans to drill an exploratory well in the winter of 2010-2011.
- Tigil
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Tigil Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Tigil 327,400 45% 31 December 2010 2 Wells 400 CloseThe Company, through its 90% ownership interest in LukinCholot, which has a 50% interest in CJSC Tigil Exploration, has an indirect 45% net beneficial interest in the Tigil Block, which covers 327,400 gross hectares located onshore in the Koryakia Region of the western side of the Kamchatka peninsula. The licence was awarded by FASU based upon a work commitment bid, whereby the Company and its partners, through CJSC Tigil Exploration, agreed to acquire 400 km of seismic data and drill two exploration wells. PetroKamchatka fulfilled the seismic work commitment, as 704 km of seismic data were acquired on the Tigil Block. The remaining work commitment (as amended in November 2008) requires the Company and its partners, through CJSC Tigil Exploration, to drill one exploration well before the end of 2009, and another well before the end of 2010. The Company may drill a third well in the Tigil Block in 2010 as a delineation well, depending upon the drilling results of the first two planned wells in the Tigil Block. The Company commenced drilling the Oyarskaya #1 exploration well in the Tigil Block on October 22, 2009.
- Palanskaya
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Palanskaya Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Palanskaya 1,251,600 100% 1 September 2014 1 Well 1,000 CloseThe Palanskaya Block is currently 100% held by the Company through its 100% interest in CJSC Palana-Exploration, a Russian Operating Company. This licence was acquired on September 24, 2009 and will expire on September 1, 2014. The Palanskaya Block is located in the northern portion of the west Kamchatka basin adjacent to the Sea of Okhotsk for the northern portion of the licence, and then continues inland to the east of the Urginskaya and Tigil licences. The Pustaretskaya licence is located on its northern border. Pursuant to the Palanskaya licence, the Company, through CJSC Palana-Exploration, must start 1,000 km of seismic data acquisition before September 24, 2011 for the licence to remain in good standing. The Company is also required to spud one exploration well prior to September 24, 2012 to be able to hold the licence to term. Since this licence was recently acquired, the Company has not yet planned for any exploration work over the next 12 months.
- Icha
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Icha Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Icha 377,700 45% 30 December 2011 1 Well 400 CloseThe Company, through its 90% ownership interest in LukinCholot, which has a 50% interest in CJSC Icha Exploration, has an indirect 45% net beneficial interest in the Icha Block, which covers 377,700 gross hectares located onshore in the Koryakia Region of the western side of the Kamchatka peninsula. The licence was awarded based upon a work commitment bid, whereby the Company and its partners, through CJSC Icha Exploration committed to acquire 400 km of seismic data and drill one exploration well. The Company and its partners, through CJSC Icha Exploration has fulfilled the seismic work commitment, as 602 km of seismic data was acquired on the Icha Block. The remaining work commitment requires the Company and its partners, through CJSC Icha Exploration to drill one exploration well before the end of October 2011. The Company expects to drill one exploration well on the Icha Block in 2011 in accordance with its commitments under the Icha licence. As at this time, the Company does not have sufficient capital resources or the requisite approval from the Board of Directors or KKPL for such well.
- Ichinskaya
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Ichinskaya Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Ichinskaya 567,200 100% 1 September 2014 1 Well 600 CloseThe Ichinskaya Block is currently 100% held by the Company, through its 100% interest in CJSC Tvayan-Exploration, a Russian Operating Company. This licence was acquired on September 24, 2009 and will expire on September 1, 2014. The Ichinskaya Block is located in the southern portion of the west Kamchatka basin adjacent to the Sea of Okhotsk to the west, the Icha exploration licence to the north and the Kolpakovsky licence area held by Gazprom to the south. The Ichinskaya licence is located on its northern border. Pursuant to the Ichinskaya licence, the Company, through CJSC Tvayan-Exploration, must start 600 km of seismic data acquisition before September 24, 2011 for the licence to remain in good standing. The Company is also required to spud one exploration well prior to September 24, 2012 to be able to hold the licence to term. Since this licence was recently acquired, the Company has not yet planned for any exploration work over the next 12 months.
- Vorovskaya
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Vorovskaya Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Vorovskaya 399,900 100% 1 September 2014 1 Well 500 CloseThe Vorovskaya Block is currently 100% held by the Company, through its 100% interest in CJSC Kehta-Exploration, a Russian Operating Company. This licence was acquired on September 21, 2009 will expire on September 1, 2014. The Vorovskaya Block is located in the southern portion of the west Kamchatka basin adjacent to the Sea of Okhotsk to the west and the Kolpakovsky licence area held by Gazprom to the north. The Vorovskaya licence is located on its northern border. Pursuant to the Vorovskaya licence, the Company, through CJSC Kehta-Exploration must start 500 km of seismic data acquisition before September 14, 2011 for the licence to remain in good standing. The Company is also required to spud one exploration well prior to September 14, 2012 to be able to hold the licence to term. Since this licence was recently acquired, the Company has not yet planned for any exploration work over the next 12 months.
Drilling Rigs
In the financial year to May 2007, PetroKamchatka (46.25%) and its joint venture partner, KKPL (53.75%), contracted for the construction of a Highkelly drilling rig. By November 2008, the Company had paid in full its equity share of construction costs relating to this rig.
On August 18, 2009, KKPL initiated an arbitration proceeding in The International Court of Arbitration against Highkelly, the manufacturer of the rig, in respect of the claim by KKPL that Highkelly failed to comply with its contractual obligations to manufacture and deliver a customized rig to KKPL in compliance with specific contracted requirements. Pursuant to KKPL's request for arbitration, KKPL is seeking to reject the rig and recover the amounts paid or, alternatively, damages for the alleged breach of contract by Highkelly. PetroKamchatka is not involved in these proceedings and is not able to predict the outcome of such proceedings.
The rig was ordered by previous management for use in the Company's Russian drilling programs. Since, it has been determined that the Highkelly rig is unsuitable for the Company's operations in Kamchatka. Although it is the intention of the Company that this rig be sold, because of the joint ownership with KKPL and the legal proceedings that are ongoing, there is no certainty as to the price that may be realized on sale or that a sale can be completed on terms acceptable to the Company. PetroKamchatka's share in the Highkelly rig has a written-down (to FMV) carrying cost of approximately US$6.0 million.
In May of 2008, the Company and KKPL agreed that a mobile drilling rig would be more suitable for the drilling activity planned in Kamchatka. This decision considered the challenges that exist for rig mobilization and efficiency, given the lack of infrastructure support presently available to oil exploration in the region. As a result, CJSC Tigil Exploration purchased a ZJ30 mobile drilling rig from a Chinese manufacturer for $7.9 million (of which the Company was required to pay 46.25% of such costs). This rig is being utilized for the current Tigil drilling program.