Share Price
The Company holds interests in licences granted by the Russian Government in respect of the following three blocks of property located in the Kamchatka Peninsula covering nearly 1,344,800 gross (1,137,065 net) hectares which represent its project areas. The Company holds a 90% interest in OJSC LukinCholot, the Company's Russian operating subsidiary for the Icha licences. The two other exploration licences are held by Russian operating subsidiaries that are 100% owned by PetroKamchatka.
- Tigil
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Tigil Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Tigil 327,400 45% 31 December 2010 2 Wells 400 CloseThe Company, through its 90% ownership interest in LukinCholot, which has a 50% interest in CJSC Tigil Exploration, has an indirect 45% net beneficial interest in the Tigil Block, which covers 327,400 gross hectares located onshore in the Koryakia Region of the western side of the Kamchatka peninsula. The licence was awarded by FASU based upon a work commitment bid, whereby the Company and its partners, through CJSC Tigil Exploration, agreed to acquire 400 km of seismic data and drill two exploration wells. PetroKamchatka fulfilled the seismic work commitment, as 704 km of seismic data were acquired on the Tigil Block. The remaining work commitment (as amended in November 2008) requires the Company and its partners, through CJSC Tigil Exploration, to drill one exploration well before the end of 2009, and another well before the end of 2010. The Company may drill a third well in the Tigil Block in 2010 as a delineation well, depending upon the drilling results of the first two planned wells in the Tigil Block. The Company commenced drilling the Oyarskaya #1 exploration well in the Tigil Block on October 22, 2009.
- Icha
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Icha Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Icha 377,700 45% 30 December 2011 1 Well 400 CloseThe Company, through its 90% ownership interest in LukinCholot, which has a 50% interest in CJSC Icha Exploration, has an indirect 45% net beneficial interest in the Icha Block, which covers 377,700 gross hectares located onshore in the Koryakia Region of the western side of the Kamchatka peninsula. The licence was awarded based upon a work commitment bid, whereby the Company and its partners, through CJSC Icha Exploration committed to acquire 400 km of seismic data and drill one exploration well. The Company and its partners, through CJSC Icha Exploration has fulfilled the seismic work commitment, as 602 km of seismic data was acquired on the Icha Block. The remaining work commitment requires the Company and its partners, through CJSC Icha Exploration to drill one exploration well before the end of October 2011. The Company expects to drill one exploration well on the Icha Block in 2011 in accordance with its commitments under the Icha licence. As at this time, the Company does not have sufficient capital resources or the requisite approval from the Board of Directors or KKPL for such well.
- Ichinskaya
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Ichinskaya Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Ichinskaya 567,200 100% 1 September 2014 1 Well 600 CloseThe Ichinskaya Block is currently 100% held by the Company, through its 100% interest in CJSC Tvayan-Exploration, a Russian Operating Company. This licence was acquired on September 24, 2009 and will expire on September 1, 2014. The Ichinskaya Block is located in the southern portion of the west Kamchatka basin adjacent to the Sea of Okhotsk to the west, the Icha exploration licence to the north and the Kolpakovsky licence area held by Gazprom to the south. The Ichinskaya licence is located on its northern border. Pursuant to the Ichinskaya licence, the Company, through CJSC Tvayan-Exploration, must start 600 km of seismic data acquisition before September 24, 2011 for the licence to remain in good standing. The Company is also required to spud one exploration well prior to September 24, 2012 to be able to hold the licence to term. Since this licence was recently acquired, the Company has not yet planned for any exploration work over the next 12 months.
- Vorovskaya
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Vorovskaya Block
License Gross Area (hectares) PetroKamchatka Net interest (%) Expiry Date Drilling Commitment Seismic Commitment (km) Vorovskaya 399,900 100% 1 September 2014 1 Well 500 CloseThe Vorovskaya Block is currently 100% held by the Company, through its 100% interest in CJSC Kehta-Exploration, a Russian Operating Company. This licence was acquired on September 21, 2009 will expire on September 1, 2014. The Vorovskaya Block is located in the southern portion of the west Kamchatka basin adjacent to the Sea of Okhotsk to the west and the Kolpakovsky licence area held by Gazprom to the north. The Vorovskaya licence is located on its northern border. Pursuant to the Vorovskaya licence, the Company, through CJSC Kehta-Exploration must start 500 km of seismic data acquisition before September 14, 2011 for the licence to remain in good standing. The Company is also required to spud one exploration well prior to September 14, 2012 to be able to hold the licence to term. Since this licence was recently acquired, the Company has not yet planned for any exploration work over the next 12 months.
Drilling Rigs
In the financial year to May 2007, PetroKamchatka (46.25%) and its joint venture partner, KKPL (53.75%), contracted for the construction of a Highkelly drilling rig. By November 2008, the Company had paid in full its equity share of construction costs relating to this rig.
On August 18, 2009, KKPL initiated an arbitration proceeding in The International Court of Arbitration against Highkelly, the manufacturer of the rig, in respect of the claim by KKPL that Highkelly failed to comply with its contractual obligations to manufacture and deliver a customized rig to KKPL in compliance with specific contracted requirements. Pursuant to KKPL's request for arbitration, KKPL is seeking to reject the rig and recover the amounts paid or, alternatively, damages for the alleged breach of contract by Highkelly. PetroKamchatka is not involved in these proceedings and is not able to predict the outcome of such proceedings.
The rig was ordered by previous management for use in the Company's Russian drilling programs. Since, it has been determined that the Highkelly rig is unsuitable for the Company's operations in Kamchatka. Although it is the intention of the Company that this rig be sold, because of the joint ownership with KKPL and the legal proceedings that are ongoing, there is no certainty as to the price that may be realized on sale or that a sale can be completed on terms acceptable to the Company. PetroKamchatka's share in the Highkelly rig has a written-down (to FMV) carrying cost of approximately US$6.0 million.
In May of 2008, the Company and KKPL agreed that a mobile drilling rig would be more suitable for the drilling activity planned in Kamchatka. This decision considered the challenges that exist for rig mobilization and efficiency, given the lack of infrastructure support presently available to oil exploration in the region. As a result, CJSC Tigil Exploration purchased a ZJ30 mobile drilling rig from a Chinese manufacturer for $7.9 million (of which the Company was required to pay 46.25% of such costs). This rig is being utilized for the current Tigil drilling program.