Regal Petroleum (LON:RPT) told investors that it has been assured, by the Ukrainian Ministry of Environmental Protection, that it will not be required to suspend its operations at its Mekhediviska Golotvshinska (MEX-GOL) and Svyrydivske (SV) gas and condensate fields, whilst it discusses an order from the Ministry dated 30 March 2010.
The company revealed that it is in ongoing dialogue with the Ministry of Environmental Protection and the Ukrainian government, after it received a letter from the Ministry of Environmental Protection on 21 May, informing it of the order dated 30 March 2010.
According to Regal, the order identified issues which require rectification, regarding the company's compliance with legislation relating to its operations at the MEX-GOL and SV gas and condensate fields. The initial order required a suspension of operations, however the company has confirmed that this is no longer the case.
The company said it immediately engaged with the relevant governmental bodies to understand the circumstances surrounding the order, and subsequently it entered into a dialogue with the Ukrainian government. Regal believe these discussions will result in the rectification of the issues, and in the meantime its operations continue as normal.
In comments to Reuters, a Regal Petroleum spokesperson indicated that the issues were procedural rather than operational.
At the Svyrydivske (SV) gas and condensate field, Regal reported positive testing results earlier this month. Regal said its SV-66 oil well in Ukraine tested at a maximum rate of 2,821 boepd (barrels of oil equivalent per day) and was unloading fluid and formation gas without assistance following perforation conducted in mid-May. Unloading commenced on 2 June after the well was completed, the rig removed and the wellhead tied in to the surface production infrastructure.
SV-66 has produced the highest initial flow rates from Regal's new generation B-Sand wells, while the flow rates delivered by the first four wells in the development programme have been highly variable.
Early last month, the company said that an independent assessment of its reserves in Ukraine was consistent with its development plan for the B-sands reservoirs, allocating 102.4 mmboe (million of barrels of oil equivalent) to an additional 'remaining possible' category and a further 151.9 mmboe to 'unrisked prospective resources' to the remaining proved & probable reserves volume of 151.3 mmboe.
The total resource for B-sands now stands at 40.9 mmboe in the remaining proved category, 110.4 in the remaining probable category for 151.3 mmboe in the remaining proven and probable category, 102.4 mmboe in the remaining possible category, 253.7 mmboe in the remaining proved, probable and possible category and 151.9 mmboe in unrisked prospective resources.
A thorough review of the completion practices in the MEX-GOL-SV field development was initiated in May 2010. For the B-Sand sequences above 5,500m, attention is focussed on perforation effectiveness, rock-fluid compatibility, and remedial chemical treatment to identify whether revised completion techniques can produce consistently higher well flow rates to complement the improvements achieved in drilling performance. For the deeper sequences, more work is required to evaluate fully the potential and optimal development strategy for those sequences.
This work will include sub-surface studies, well and wellhead design work, facility upgrade studies and the implications of potentially higher individual well production rates for Regal’s capex (capital expenditure) programme.
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