Victoria’s strategy is to grow into a mid cap E&P company with the development of its existing high class fields and prospects and via the acquisition of opportunistic undervalued assets, particularly in Africa and the FSU.
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A Russian winter road, neighbouring the West Medvezhye licence area. |
The West Medvezhye oil, gas and gas condensate licence near Nadym in Western Siberia, lies in the Yamal Peninsula. This area is one of the most prolific gas regions in the world where over 70 Tcf of gas has been produced. In 2004, the Company acquired a 74.8% interest in Russian company ZAO SeverGas-Invest (SGI), which holds the licence for the West Medvezhye field and in 2005 Victoria acquired the remaining 25.2% bringing its total shareholding to 100%.
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West Med lies near to the super-giant Medvezhye field and is located about 120km from Urengoy, the largest gas and condensate field in the world. The Medvezhye field has been in production since 1972. In 2006, independent reserve auditors DeGolyer and MacNaughton have given best estimates for the total prospective recoverable resource volumes for the 1,224 square kilometre licence of 1.1 billion barrels of oil equivalent. In 2011, Mineral prepared structure maps and seismic attributes anomaly maps for all the prospective formations in the West Med block. These were integrated with the Company's passive seismic, gas tomography and geochemical studies to define/rank leads and prospects and to further assess the 103 discovery. In September 2011, Mineral has concluded West Med prospective resources are now in excess of 1.4 billion boe including increased oil prospectivity of approximately 670 million barrels of oil in the Lower Cretaceous Neocomian-Achimov and Jurassic formations. |
Well 103 was drilled to a total depth of around 3,900 metres intersecting two hydrocarbon-bearing intervals in the Jurassic (J2) and Bazhenov at depths of between 3,718 and 3,741 metres.
Following extensive testing during 2007, a discovery was approved by the Russian Ministry of Natural Resources and C1 + C2 proven reserves of 14.4 mmboe were calculated for the Well 103 location during 2008. The current reserves and resources estimate for the licence area are as follows:
| Category | MMboe | Remarks |
| C1 + C2 Reserves | 14.4 | Based on Russian Classifications |
| C3 Resources | 170 | Based on Russian Classifications |
| Prospective Resources | 1122 | Independently Assessed by DeGolyer and MacNaughton |
Following the 103 discovery, the company has pursued a cost-effective work-programme over the past three years to appraise the 103 area and firm–up the leads and prospects mapped by DeGolyer and MacNaughton (D&M) based on conventional seismic. The programme included two passive seismic and two gas tomography (geochemical) surveys over the 103 discovery and the other leads and prospects respectively. More than 60 km of winter roads were constructed within the licence area to provide access for the survey equipment and personnel to the areas of interest.
VOG's technical team has carried our preliminary integration of the new data with existing datasets including seismic and well data. The results confirmed hydrocarbon presence in the area of three seismically defined structures mapped by D&M.
Work is progressing and the studies are highlighting several interesting leads for more detailed analysis and future drilling.
The company has maintained relationships with Russian geosciences consulting institutes with established experience in the region including OGFC Siberian Scientific & Analytical Centre, "SibNats" and Mineral LLC, "Mineral" to discuss technical collaboration. In the first quarter of this year, VOG commissioned a seismic reprocessing and geological modelling study with Mineral to re-interpret certain targeted areas taking into account the newly integrated survey information.
In February 2011, VOG presented the results of our 2010 work programme and the forward plans for this year and 2012 to the Ministry of Natural Resources and other official bodies in Russia and the plans were approved. The company plans to run 185 km of 2D seismic in 2011 and to commence drilling of two exploration/appraisal wells in 2012. Drilling locations will be decided based on the results of the seismic reprocessing and re-interpretation as well as the results of the 2D seismic planned for later this year.
In our last update to the market on West Med in July 2011, we informed you that the Company had commissioned a seismic reprocessing and geological modelling study to be carried out on West Med by an independent Russian geoscience consulting institute, Mineral LLC ('Mineral'), incorporating the passive seismic survey results, gas tomography and conventional 2D seismic. This work is now complete and a technical workshop was held in Tyumen, Russia in August to review the work and its conclusions.
Mineral has prepared structure maps and seismic attributes anomaly maps for all the prospective formations in the West Med block. These were integrated with the Company's passive seismic, gas tomography and geochemical studies to define/rank leads and prospects and to further assess the 103 discovery.
On the basis of their independent assessment received at the end of August, Mineral has concluded West Med prospective resources are now in excess of 1.4 billion boe including increased oil prospectivity of approximately 670 million barrels of oil in the Lower Cretaceous Neocomian-Achimov and Jurassic formations. These results exceed the previous estimate by D&M by more than 300 million boe and our team continue their assessment and submitted an application in November 2011 to the Russian authorities requesting approval of our proposed drilling locations.
West Med Current Reserves & Resources Estimates
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Category |
MMboe(1) |
Remarks |
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C1 + C2 Reserves |
14.4 |
Russian Classification |
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C3 Resources |
170 |
Russian Classification |
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Prospective Resources |
1100 |
Independently Assessed by D&M |
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Updated Prospective Resources |
1400 |
Independently Assessed by Mineral |
(1) Million barrels of oil equivalent
Mineral are the leading consultants in Russia for this specialised geological work and have an excellent proven track record in Siberia where our West Med block is located. We believe that their updated assessment of over 1.4 billion boe is of major significance and demonstrates the very real potential of our West Med block.
In the meantime, our technical consultant, Blackwatch, has been carrying out integrated appraisal and development studies. The principal objective of the 2011 work program has been to assess and plan for the commercialisation of the large prospective resources and to explore ways to exploit Well 103 with an early production scheme to generate early cashflows. Specific appraisal and development work carried out on the Well 103 area and the prospective resources has included:
Preliminary development assessment work on the Well 103 discovery indicates that we will plan for first oil sales in 2015 subject to further refinement and screening. We shall update you on our West Med programme as the results of our feasibility studies emerge. Valuation parameters under various conceptual development schemes for Well 103 and the prospective resources will also be highlighted once feasibility studies have been completed.
