Genel Energy has a 40% interest in the Chia Surkh licence located in the southernmost region of the Kurdistan Region, adjacent to the Iranian border. It is 70 km from Sulaimaniyah and 120 km from Kirkuk.
The first exploration well to be drilled on this block since 1954, Chia Surkh 10, spudded in October 2012 and was announced as a significant discovery in April 2013. The well was drilled to a depth of 1,696 metres in the Oligo-Miocene section, and on test, flowed at up to 11,950 bopd of 41 degree API and 15 mmscfd of gas. A second DST was carried out in the Miocene, and flowed at sustained rates of 3,200 bopd of 38 degree API oil and 8.4 mmscfd of gas. CS 10 has been suspended as a future producer.
The Chia Surkh discovery was appraised by the CS-11 well, which was drilled 3km to the northwest of CS-10 and 85 metres down-dip on the structure. It penetrated a gross hydrocarbon column of 170 metres in Miocene and Oligocene aged reservoirs. The Miocene Jeribe formation previously tested in CS-10 flowed at a cumulative rate of 3,550 bpd of 50 degree API oil and 21 mmscfd of gas from two zones. Deeper Miocene and Oligocene formations not penetrated in the CS-10 well flowed at a combined rate of 3,660 bpd of light oil and 25 mmscfd of gas.
Based on current data and ahead of further exploration and appraisal activity, gross 2C contingent resource on the Chia Surkh structure is estimated at 250 mmboe.
In October 2015, Genel disposed of a 20% interest in the Chia Surkh Production Sharing Contract to its partner Petoil, thereby reducing its interest to 40%. As consideration for the sale of the 20% interest, Petoil will carry Genel's share of the costs associated with the Chia Surkh-12 ('CS-12') appraisal well. The total cost of the CS-12 well is estimated at c.$50 million, with drilling expected to commence in April 2016. The drilling will help refine the contingent resource estimate for the Chia Surkh licence, which is now estimated at 225 million barrels of oil equivalent.
Under the terms of the disposal, Petoil has transferred $10 million to Genel in the form of security which will be released at different stages of well operations in accordance with cash calls, well completion and testing. The operatorship of the Chia Surkh PSC will also transfer from Genel to Petoil for the duration of the CS-12 well.