Daytona Energy signs agreement with Wilco Turkey
Daytona Energy Corp DYT
Shares issued 18,792,306 Oct 23 close $0.11
Tue 24 Oct 2000
Dr. James Edwards
Daytona Energy has signed an agreement with Wilco Turkey Ltd. to
participate in the drilling of the Canhidir-1, a gas appraisal well in the
Thrace basin of Turkey. The 1,400-metre well is the seventh well to be
drilled on the Kandamis production licence, but the first well to use
modern drilling and completion techniques. The objectives of the drilling
program are to properly evaluate the multiple pay horizons encountered by
the previous wells, establish flow rates for future production and quantify
possible recoverable reserves. Wilco anticipates an early November spud
date. Daytona's dry hole drilling cost will be approximately $50,250 and
its completed well cost will be approximately $62,750.
Following the appraisal drilling, Daytona has the option to continue with
the development program for the Kandamis field and the right to participate
in five exploration licences held by Wilco. To exercise its option, Daytona
must reimburse Wilco for 6.7% of Wilco's historical cost base of $1-million
and pay Wilco a one-time prospect fee of $25,000, Subject to Canadian
Venture Exchange approval, Wilco has agreed to take Daytona stock to
satifsy Daytona's financial obligation. Under the terms of the agreement,
Wilco will receive up to 901,600 shares of the company's stock at an issue
price of Can$0.15 per share should Daytona elect to continue with the
development program at Kandamis and participate in the exploration
licences. Daytona's working interest in both the production lease and the
exploration licenses will be 5 per cent.
The Kandamis Field is included in the 101-square-kilometre Kandamis
production licence first awarded in 1989. The discovery well was drilled in
1959, by N.V. Turkse Shell; although gas shows were reported, there was no
gas market at that time and Shell opted to withdraw from the acreage.
Subsequent 2-D seismic and drilling by local operators from 1985 to 1991,
confirmed the presence of a large gas-bearing structure but further
development was precluded by an ill-defined but evolving gas market.
In the late eighties, the Turkish Republic made a commitment to base its
energy economy on natural gas. The country currently imports more than 95
per cent of its needs, primarily through a natural gas line from Russia and
the importation of Liquified Natural Gas (LNG) from Algeria. In July, 1998,
the United States Energy Information Administration (EIA) noted that Turkey
was one of the fastest growing power markets in the world, estimating that
Turkey's electric power consumption had grown at 9 per cent per year on
average from 1973 through 1995. Projections by Turkey's Electricity
Generating and Transmission Corporation (TEAS) have more recently projected
that Turkey's rapid annual growth in electricity consumption will continue
over the next 15 years.
According to Dr. James Edwards, Daytona's chairman and chief executive
officer: "This farm-in opportunity is perfect for Daytona in that the
drilling risk has been mitigated by the previous wells in Kandamis, the gas
market is present and the joint venture is committed to early production.
Additionally, Daytona has an option to participate in the five exploration
tracts held by Wilco in the Thrace basin. Success and early production at
Kandamis will give the company financial leverage for future exploration
programs."
Participants in the Kandamis Joint Venture include Wilco Turkey Ltd.
(operator, 57.5-per-cent working interest); Zarara Oil and Gas Limited
(25-per-cent working interest); F-C Kandamis Holdings (12.5-per-cent
working interest); and Daytona Energy (5-per-cent working interest).
The transaction is arm's-length and no finders fee is payable. Daytona has
no financial or other relationship with any of the other parties in the
project. |
