TransAtlantic Petroleum (TSE:TNP) said on Thursday that it has struck an agreement with LNG Energy (CVE:LNG) whereby LNG is to invest $7.5 million to begin drilling a exploration well on the A-Lovech claim, in Bulgaria.
The impetus of the 3,200 metre drilled exploration well is to core and test the unconventional Etropole formation.
The agreement, between LNG and TransAtlantic’s wholly owned subsidiary, TransAtlantic Worldwide, stipulates that LNG will invest US$7.5 million which is to be used by Direct Petroleum Bulgaria, a unit of Worldwide, to drill the Peshtene R-11 well this week.
TransAtlantic’s President Gary Mize said: "With its participation in a number of licenses in the shale play in Poland, LNG brings hands-on experience to the exploration of the Etropole formation for natural gas.”
“The drilling of an Etropole test well will increase our technical understanding of the play and is the first step in our effort to unlock the long-term potential in the Etropole.”
Subject to various conditions, including the issuance of the Etropole concession by the Bulgarian government, LNG will fund up to an extra $12.5 million, of which $7.5 million will be used to drill a second well or for other exploration activities on the Etropole concession.
In exchange, and subject to approval by the government of Bulgaria, LNG will form a Bulgarian subsidiary to acquire a 50% working interest in the Etropole concession.
The A-Lovech exploration license, or Etropole concession, which is 100% owned and operated by Direct Bulgaria, covers an area of about 565,000 acres in northwestern Bulgaria, all of which is prospective for the Etropole formation.
The deal with LNG covers the southern portion of the A-Lovech exploration license. The area is about 405,000 acres.
Direct Bulgaria will file an application for a production concession over this southern portion of the A-Lovech license later this fall, while the results of the Peshtene R-11 well will be used in support of the application.
Chief Executive Mallon Mitchell of TransAtlantic said “We are excited to partner with LNG to accelerate our campaign to target and exploit the natural gas potential of the unconventional Etropole formation.”
TransAtlantic Petroleum is a vertically integrated international energy company engaged in the development and exploration of crude oil and natural gas. It holds interests in developed and undeveloped oil and gas properties in Turkey, Bulgaria and Romania.