The Subba & Luhais project will be completed by end 2011. While we are the operator of record, day to day operations are under the control of Makman who paid Petrel US US$7 million to take 100% ownership. We maintain a 10% profit interest. Despite facing obstacles that would defeat most groups, Petrel/Makman have delivered the contracted elements of a 200,000 barrel a day oil development.
We continue to maintain an interest in the former Block 6. It should be noted that this nomenclature refers to areas included in blocks advertised over a decade ago. It is not the same as the Block 6 offered in recent rounds. Petrel began to work on the 10,000 sq km Western Desert area formerly known as Block 6 in 2000 and reached agreement with the authorities on a work programme in 2002. No final signatures were obtained. Article 40 of the draft hydrocarbon law requires the Ministry of Oil to review 2003 agreements to operate in accordance with the law. We think and hope that this means a revision of financial terms and a new work programme. We are ready to begin field work once agreement is reached.
The Petrel board of directors and management team has extensive experience in resources in Africa. While waiting for a clear path in Iraq, an opportunity arose to apply for a highly prospective onshore/offshore block in Ghana, Tano 2A, close to the massive discoveries of Tullow and Kosmos. A consortium of four companies applied for, and obtained the 1,532 sq km Tano 2A block. The target is a multibillion barrel discovery in the prolific Cretaceous geological structure. Terms in Ghana are good. The agreement was signed in 2010 with the Ghana National Petroleum Company (GNPC) and is now working its way through cabinet and parliament. The agreed work programme requires a minimum expenditure of US$25 million in the first three years including a well. While awaiting ratification we have acquired, processed and analysed 769 kilometres of seismic and studied five horizons at different depths. We have identified a number of promising areas.
Petrel, in a previous guise and time, was an active participant in Irish offshore exploration working on three blocks in the Irish Sea (Kish Basin), Celtic Sea (Block 57/1) and Porcupine (Blocks 35/23 and 35/24). Nothing commercial was discovered. In the past year the Irish government has offered large offshore blocks totalling 500,000 sq km. The fiscal terms are very good, title is not an issue and there is a positive State attitude. They need to be positive as drilling results have been poor and exploration costs will be high.
Following a detailed review of newly constructed seismic base maps together with analysing well log data on over 50 holes a number of leads were identified. Petrel has submitted applications for blocks in the Porcupine Basin.
Petrel with over US$6 million in cash is well financed for all current activities. We are active in Iraq, Ghana and now Ireland. We are very hopeful of participating in the 4th Licencing Round in Iraq. The status of our Western Desert interest awaits the passing of the Hydrocarbon Law. Once parliament approves our Ghana licence we will move quickly. We know what we want to do and have the cash to do it. Many shareholders have been patient for a long time and we appreciate that support. They understand that we have no control over the decisions of sovereign states. Building a successful hydrocarbon company in politically uncertain areas is high risk but, in the areas we are, the potential is great.