MENA Hydrocarbons Inc. ("MENA" or the "Company") (TSX VENTURE:MNH)
is pleased to announce an operations update for Lagia oil field
development in Egypt.
Drilling rig negotiations
MENA is negotiating an offer from the Egyptian Drilling Company
(EDC) to contract one of two rigs to commence operations on its
Lagia oil field development in Egypt. The initial six well
programme consists of working over two existing wells, the drilling
of two development wells and drilling a further two appraisal
wells. The contracted rig is expected to be mobilised to site in
January or February 2012.
MENA has finalised all other work programmes and service
contracts to commence work over and drilling operations. The
existing Lagia 6 and 7 wells are expected to be completed with a
subsurface pump whereafter two development wells and two appraisal
wells are planned to be drilled. It is expected that the
development wells will be completed with thermal casing in order to
facilitate steam injection as part of a cyclic steam soak pilot
project. Installation of temporary production facilities has been
contracted, and is expected to begin in December.
In preparation for the workovers, the Lagia 7 well was opened
and crude oil samples were taken from surface. The produced oil is
expected to be transported by road tanker to nearby production
facilities to either of the Suez Oil Company (SUCO) or the General
Petroleum Company (GPC). First routine production is expected in
the first quarter of 2012.
Lagia Oil Field
MENA is the sole owner of the Lagia Development Lease covering a
32 square kilometre block of land located on the Sinai Peninsula,
directly adjacent to the Gulf of Suez. Within the lease, four wells
have been drilled between the years 1949 to 2000 that have
identified the Lagia oil field. Three producing oil fields, Sudr,
Matarma and Asl, are located as close as 26 km to the north of the
Lagia oil field.
The following table sets forth certain information relating to
MENA's crude oil reserves contained in one main fault block covered
by the Lagia Development Lease and the net present values of future
net revenue associated with such reserves, as evaluated by DeGolyer
& MacNaughton Canada Limited ("D&M") in the report of
D&M dated May 19, 2011 evaluating the crude oil reserves of
MENA as at May 18, 2011 (the "Lagia Reserves Report") in accordance
with National Instrument 51 101 - "Standards of Disclosure for Oil
and Gas Activities" and the standards contained in the Canadian Oil
and Gas Evaluation Handbook ("COGE") and NI 51-101.
-------------------------------------------------------
Gross
Working
Interest
Remaining
Reserves Net Present Values of Future Net Revenue
-------------------------------------------------------
Discounted US$
---------------------------------
Heavy Crude Undis-
Oil bbl counted at 5% at 10% at 15% at 20%
-------------------------------------------------------
Proved Developed
Proved Undeveloped 1,149,190 10,387 5,681 2,425 150 (1,453)
Probable 2,898,104 54,816 37,696 26,840 19,646 14,679
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Total Proved plus
Probable 4,047,294 65,203 43,377 29,265 19,796 13,226
Possible (1) 6,410,376 107,183 65,759 39,688 25,652 17,039
-------------------------------------------------------
Total Proved plus
Probable plus
Possible (1) 10,457,670 172,386 107,136 68,953 45,448 30,265
Notes:
1. Possible reserves are those additional reserves that are less certain to
be recovered than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of proved
plus probable plus possible reserves.
2. Pursuant to the Lagia Concession, the Egyptian General Petroleum Company
will pay MENA's share of income taxes out of its share of the profit oil
and gas. As Egyptian income tax is factored into the royalty deductions,
income tax is deducted from all future net revenue amounts. Accordingly,
the net present value of future net revenue attributable to the reserves
categories referred to above are the same both before and after
deducting future income tax expenses for the purposes of NI 51-101.
3. MENA requested that D&M provide the Lagia Reserves Report following the
completion of the acquisition of the remaining 25% interest in the Lagia
Development Lease and the related Lagia Concession. Other than
information relating to such acquisition, the Lagia Reserves Report is
based on data and other information available as of December 31, 2010.
4. It should not be assumed that the estimates of future net revenues
presented in the table above represent the fair market value of the
reserves.
D&M also prepared a report dated July 26, 2010 estimating,
as of March 31, 2010, the contingent petroleum resources of certain
heavy crude oil accumulations located in the Lagia oil field (the
"Lagia Resource Report"). Estimates of the gross working-interest
(100% interest) contingent oil resources quantities for certain
heavy crude oil accumulations located in the Lagia oil field, as of
March 31, 2010, are summarized as follows, expressed in barrels
(bbl) of oil:
Low Estimate Best Estimate High Estimate
------------------------------------------
Gross working interest contingent
oil resources, bbl 356,823 3,374,001 11,992,575
Notes:
1. Recovery efficiency is applied to contingent resources in this table.
2. Application of any risk factor to contingent resources quantities does
not equate contingent resources with reserves.
3. There is no certainty that it will be commercially viable to produce any
portion of the contingent resources evaluated and described above.
The petroleum resources set out above are classified as
"contingent resources". Contingent resources are those quantities
of petroleum estimated, as of a given date, to be potentially
recoverable from known accumulations using established technology
or technology under development, but which are not currently
considered to be commercially recoverable due to one or more
contingencies. Contingencies may include factors such as economic,
legal, environmental, political, and regulatory matters or a lack
of markets. It is also appropriate to classify as contingent
resources the estimated discovered recoverable quantities
associated with a project in the early evaluation stage. Contingent
resources are further classified in accordance with the level of
certainty. See "Uncertainty Categories" below for further
information.
Contingent resources may also be sub-classified based on project
maturity and/or characterized by their economic status. Because of
the lack of commerciality or sufficient development drilling, the
contingent resources estimated in the Lagia Resource Report cannot
be classified as reserves. The contingent resources estimated in
the Lagia Resource Report were assigned an economic status of
"undetermined". The principle contingencies identified in the Lagia
Resource Report are that the project is at an early evaluation
stage, and further development is required. There is no certainty
that it will be commercially viable to produce any portion of the
contingent resources.
About MENA Hydrocarbons
MENA Hydrocarbons is an international oil and gas company
focused on growing an asset base of production, development and
high impact exploration in the Middle East and North Africa region.
In Egypt, MENA owns and operates the development lease for the
Lagia oil field, a 32 square kilometre onshore block located on the
Sinai Peninsula, directly adjacent to the Gulf of Suez. In Syria,
MENA owns a 30% participating interest in Block 9 in Syria, a
10,032 square kilometre onshore block prospective for crude oil,
natural gas and condensate. In the United States, MENA owns 6,242
gross acres (with an 81.2% average working interest) in
Northwestern Montana with light/medium oil reserves, and 36,201
gross acres (with a 99.5% average working interest) in East-Central
Utah prospective for both commercial gas sand and coal bed methane.
MENA's shares currently trade on the TSX Venture Exchange under the
symbol "MNH".
For more information, please see MENA's corporate presentation
on www.menahydrocarbons.com.
Forward looking information
This news release contains forward-looking information relating
to the Company's growth and related strategy, reserves and resource
estimates, planned development and exploration activities on the
properties in which the Company has interests, and other statements
that are not historical facts. Such forward-looking information is
subject to important risks, uncertainties and assumptions. The
results or events predicated in this forward-looking information
may differ materially from actual results or events. As a result,
you are cautioned not to place undue reliance on these
forward-looking information.
Forward-looking information is based on certain factors and
assumptions regarding, among other things, the impact of increasing
competition; the general stability of the economic and political
environments in which the Company operates or owns interests; the
timely receipt of any required regulatory approvals; the ability of
the Company to obtain qualified staff, equipment and services in a
timely and cost efficient manner; drilling results; the ability of
the operator of the projects which the Company has an interest in
to operate the field in a safe, efficient and effective manner; the
ability of the Company to obtain financing on acceptable terms;
field production rates and decline rates; the ability to replace
and expand oil and natural gas reserves through acquisition,
development of exploration; the timing and costs of pipeline,
storage and facility construction and expansion and the ability of
the Company to secure adequate product transportation; future oil
and natural gas prices; currency, exchange and interest rates; the
regulatory framework regarding royalties, taxes and environmental
matters in the jurisdictions in which the Company operates; and the
ability of the Company to successfully market its oil and natural
gas products, and other similar matters. While the Company
considers these assumptions to be reasonable based on information
currently available to it, they may prove to be incorrect.
Forward looking-information is subject to certain factors,
including risks and uncertainties that could cause actual results
to differ materially from what is currently expected. These factors
include risks associated with instability of the economic and
political environments in which the Company operates or owns
interests, oil and gas exploration, development, exploitation,
production, marketing and transportation, loss of markets,
volatility of commodity prices, currency fluctuations, imprecision
of reserve estimates, environmental risks, competition from other
producers, inability to retain drilling rigs and other services,
incorrect assessment of the value of acquisitions, the inability to
settle the definitive terms of the farmout arrangements, failure to
realize the anticipated benefits of acquisitions, delays resulting
from or inability to obtain required regulatory approvals and
ability to access sufficient capital from internal and external
sources, reliance on key personnel, regulatory risks and delays,
including risks relating to the acquisition of necessary licenses
and permits, environmental risks and insurance risks.
The estimates of reserves and resources in this news release
constitute forward-looking information which are subject to certain
risks and uncertainties, including those associated with the
drilling and completion of future wells, limited available
geological data and uncertainties regarding the actual production
characteristics of, and recovery efficiencies associated with, the
reservoirs, all of which are being assumed. As estimates, there is
no guarantee that the estimated reserves or resources will be
recovered or produced. Actual reserves and resources may be greater
than or less than the estimates provided in this presentation.
Information concerning the independent evaluations from which these
estimates are derived may be accessed under the Company's profile
on SEDAR at www.sedar.com.
You should not place undue importance on forward-looking
information and should not rely upon this information as of any
other date. While the Company may elect to, the Company is under no
obligation and does not undertake to update this information at any
particular time, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: MENA Hydrocarbons Inc. Graham Lyon President &
Chief Executive Officer +1(403) 930-7500 +1 (403) 930-7599 (FAX)
MENA Hydrocarbons Inc. Jason Bednar Vice President & Chief
Financial Officer +1(403) 930-7500 +1 (403) 930-7599 (FAX) MENA
Hydrocarbons Inc. 1000, 205 - 5th Avenue S.W. Calgary, AB T2P
2V7general_inquiries@menahydrocarbons.comwww.menahydrocarbons.com