CALGARY, ALBERTA--(Marketwired - Jan. 7, 2015) - Serinus Energy Inc. (TSX:SEN)(WARSAW:SEN) ("Serinus", "SEN" or the "Company") is pleased to announce that the Makeevskoye-22 ("M-22") exploration well has reached its total depth of 3,629 metres, and has encountered gas in six zones. Two of those zones appear to be net pay, with the other four having resource potential. Casing has been run and cemented, and the operator, KUB-Gas LLC ("KUB-Gas"), is now preparing to complete, test and tie-in the well. KUB-Gas is a partially-owned subsidiary in which SEN has a 70% effective ownership interest through its 70% shareholding of KUBGas Holdings Limited.
M-22 was spud on October 1, 2014, and is located on the southwest side of the major fault that runs through the Makeevskoye and Olgovskoye licences. The table below shows the breakdown of the log results for the six prospective zones:
|M-22 Log Results Summary|
|Net Pay||Average Porosity|
|Net Thickness||Average Porosity|
The S6 and S13a zones appear to be the most promising. The S6 is commercially productive in the area in the M-16, M-17 and O-15 wells. The S13a has the best porosity of the six zones and had gas shows during drilling, but it as yet untested within the Company's licences. The well is being cased to total depth, and test programs for both are being planned.
The S5, S7, S13 and S13b zones have resource potential. All are tighter than the S6 and S13a, and the S13 and S13b have underlying water legs which may require horizontal drilling to eventually develop. These zones will require additional study and analysis to verify their potential.
In addition to potential production and reserves additions (pending successful testing), the M-22 well has two significant impacts on the exploration and development program in the Makeevskoye and Olgovskoye licences:
Once testing is completed in early February, the Company anticipates that the well will be tied in within a few weeks as several flowlines were pre-built in late 2014 in advance of the drilling program. The final tie-in will be subject to the usual regulatory approvals from the Ukrainian authorities.
Ukrainian Government Extends Recent Royalty Rate Increases
The Ukrainian government has passed an amendment to the Tax Code of Ukraine, which among other things, has made permanent certain changes in the royalty rates for hydrocarbon production. These changes were originally implemented on August 1, 2014 as a temporary measure. Wells producing from formations at depths of 5,000 metres or shallower are now subject to royalties of 55% and 45% on natural gas and oil/liquids respectively. Wells producing from formations deeper than 5,000 metres are subject to rates of 28% on gas, and 21% on oil/liquids. The amendment also provides for a 2% sales tax on natural gas.
The original resolution of July 2014 which first introduced these higher royalties also provided for a "lowering coefficient" of 55% on natural gas, which reduced the effective rate to 30.25% for the first two years of production. The new amendment does not address this relief period, so it is unclear whether it has expired with that original legislation. The Company will be seeking clarification on this and other aspects of the administration of this new resolution on an expedient basis.
Serinus is an international upstream oil and gas exploration and production company that owns and operates projects in Ukraine, Tunisia, and Romania.
For further information, please refer to the Serinus website (www.serinusenergy.com).
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Translation: This news release has been translated into Polish from the English original.
Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.