Petroceltic Planning to Drill in Kurdistan in 2013

In its preliminary results announcement on Thursday, Irish oil and gas exploration company Petroceltic made the following statement on its operations in Iraqi Kurdistan:

Petroceltic has been considering making an investment in the highly prospective Kurdistan region of Iraq for several years. We were attracted by the prospective geology of the region, in the shape of the folded anticlines of the Zagros fold belt. These opportunities had been widely explored in Iran and other parts of Iraq, but largely left undrilled in Kurdistan, primarily for political rather than technical reasons.

Throughout 2010 and early 2011 the Company continued to carry out geological work in our chosen areas of focus and to present the results of our analysis to the technical experts of the Ministry of Natural Resources of the Kurdistan Regional Government ("KRG"). As we progressed in our studies and understanding of the area, we concluded that a partnership with a larger company would significantly improve to our chance of success.

In July of 2011, that decision paid off when Petroceltic, in partnership with Hess Corporation and the KRG was awarded Production Sharing Contracts for the Dinarta and Shakrok blocks. Petroceltic holds a 16 per cent interest in each PSC, with Hess Corporation holding 64 per cent and operating on behalf of the partnership. The Kurdistan Regional Government has a 20 per cent carried interest in each block.

The blocks are in the area to the North and East of the Kurdish capital Erbil in the oil fairway established by the nearby Shaikan, Atrush, Swara Tika and Bina Bawi oil discoveries. Since award, the contract for 2-D seismic has been tendered and awarded to BGP, a Chinese-owned seismic company which has operated in the adjacent blocks on behalf of Murphy, DNO, MOL and Maersk-Hillwood. The acquisition of approximately 850 kilometres of 2-D seismic has recently commenced and is expected to complete in December 2012, following which the joint venture plans to drill at least one exploration well in each of the PSC areas in 2013.

Chief Executive, Brian O'Cathain, commented:

"In Kurdistan, the completion of the 2-D seismic in 2012 will set the scene for an exciting drilling programme in 2013."

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