Annual Report & Accounts 2013




Average production of 28 MMcfpd of gas

Successful completion of the Kaliakra-1 subsea production well tie-back

Applied for a two year extension to the Galata exploration concession

Signature of the Production Concession for the Kavarna East development

Daisy on the Ohoopee

Petroceltic has a 100% operated interest in three producing gas fields and one future development in the Galata concession which is located in shallow water, offshore Bulgaria in the Black Sea. The producing fields were developed using an unmanned platform located on the main Galata field, to which the Kaliakra and Kavarna fields have been tied-back using subsea completions. The fields produce sufficient gas to meet around 15% of the current Bulgarian gas demand and provide the Group with a stable and predictable source of cash flow. The Galata concession contains some further exploration potential which is currently being re-assessed in preparation for potential future drilling activity.

Production +-

The combined production rate from the Galata, Kaliakra and Kavarna fields averaged 28 MMcfpd during the year with a cumulative volume of 10.2 bcf. The gas was sold to two customers, Bulgargaz (the state gas utility company) and Agropolychim (an independent fertiliser plant) at an average price of $8.35/Mcf giving total revenues of $81.6m.

The Galata field performed exceptionally well during 2013. This field recommenced production in February 2013 after an extended shut-down period during which additional gas volumes have entered the main area of the reservoir from peripheral regions of the field. This has resulted in an increase in the reservoir pressure, and pressure surveys run in well GE-2 in June and December 2013 indicated that water movement into the field has also been arrested. Consequently, the field was capable of producing at an average rate of 8.2 MMcfpd during the year and the ultimate field reserves have increased by 3% to 78.8 Bcf.

During the first half of 2013, the Kaliakra production well suffered from increasing levels of water production which presented a number of operating challenges related to water treatment and disposal. In order to resolve these issues and to maximise the field’s gas reserves, the decision was taken to complete a replacement well and shut-in the existing producer.

The original discovery well, Kaliakra-1, which had been temporarily suspended was selected for use as the replacement producer and completed with a subsea wellhead and tree using the GSP Prometeu jack up rig. This well was then tied-into the existing Kaliakra flow line and production commenced on 11 September. The use of the original Kaliakra-1 discovery well and the existing field flow line was an innovative development solution which reduced the capital requirements considerably.

The new well produced at an average rate of 10.6 MMcfpd during the period it was on stream. However, the rate decline has been greater than expected, and pressure behaviour suggests it is in only partial pressure communication with the main area of the field. It has therefore been considered prudent to reduce the Kaliakra field reserves by 2.7 Bcf to 31.6 Bcf, which effectively offsets the increase booked for the Galata field.

Development +-

The Kavarna East field was discovered in 2010 and contains approximately 9.6 Bcf of gas reserves. The field is scheduled to come on stream in the second half of 2015 and will be developed using the same capital efficient approach adopted for the Kaliakra-1 well tie-back. During 2013, the Group successfully applied for the field Production Concession and completed the development planning and the procurement of the long lead time equipment.

Exploration +-

During the year, the Group drilled the Kamchia-1 well in the Galata block. This well targeted a biogenic gas prospect in the Paleocene formation, which is the main reservoir interval in the existing producing fields. The well was drilled in May but the reservoir was found to be mainly water bearing and contained sub commercial gas saturations.

The Group has applied for a two year extension to the Galata exploration concession. The extension request is presently awaiting final ratification by the Council of Ministers. The commitment work programme associated with the extension includes a review of all the available technical data on the block, a re-evaluation of the remaining prospectivity and a possible future exploration well.