Xtract Energy says Elko’s net prospective resource hits 936 million barrels of oil

Xtract Energy (LON:XTR) highlighted a resource update, released yesterday by its 50%-owned associate Elko Energy,  for the Denmark exploration license 02/05 and the Netherlands licenses P01 and P02. Elko hired TRACS International to update the Independent Competent Persons Report (CPR) for both projects.

On the Danish license, where Elko retains 33% interest following a recent farm-out to the Norwegian Energy Company ASA (Noreco), Elko’s estimated attributable prospective resource now stands at 3,557 billion cubic feet (bcf) of gas or 936 million barrels of oil (mbo).

On the Danish license, Elko and Noreco are currently carrying out technical studies to optimize the first well location. The partners are planning to drill the first exploration well in 2011. The well will be designed to test the overall play concept, and the company highlight that if the overall play concept is proven, it would expect the license to attract considerable industry interest and lead to a corresponding increase in asset value.

The company acknowledged that for the first well, whilst the individual leads have a low overall probability of success - ranging up to 8.6% - the chances of success in proving the overall play concept is judged to be considerably higher. 

According to TRACS, the Dutch acreage contains a substantial number of proven discoveries and undrilled exploration prospects.

TRACS estimates contingent resources, for the 5 confirmed discoveries, at 280bcf of un-risked net attributable hydrocarbon gas, with a commercial chance of success ranging from 40% to 75%. The consultant also estimates prospective resources, for the 6 key prospects in the exploration portfolio, of 291bcf un-risked net attributable hydrocarbon gas. TRACS assigned the probability of success, for the 6 prospects, between 45% and 65%.

Also, with regard to the Dutch project, Elko told investors that discussions to take blocks P1 and P2 to the next exploration phase on the licenses are progressing well, and the Board believes that a satisfactory arrangement can be achieved, within the time frame of its license commitments and within the existing financial capacity of Elko.

“The development of blocks P1 and P2 would represent an off-shore development of considerable size and importance, helping to secure gas supplies in the heart of Europe”, Elko stated.

Elko Energy has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset is in the Danish North Sea: an 80 percent interest on 26 offshore blocks in a 5,400 square kilometres exploration and production licence close to the prolific Central Graben oil field. Elko also holds a 60 percent operating interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea.

http://www.proactiveinvestors.co.uk/companies/news/18116/xtract-energy-says-elkos-net-prospective-resource-hits-936-million-barrels-of-oil--18116.html