Romania has been a leading oil and gas producer in Eastern Europe for over 150 years. Today, Romania remains the largest producer of oil and gas in Central and Eastern Europe, with production of approximately 87,000 bpd of liquids and 1 bcfpd of gas. Romania holds a number of onshore and offshore petroleum basins which are considered under-explored. In particular, the industry is targeting significant potential in the offshore Black Sea area and deeper untested plays onshore.
As a net petroleum importer, Romania offers very competitive fiscal concession terms to attract foreign capital for petroleum exploration and field development. Production can be sold at world prices and domestic gas prices are beginning to move higher as part the country’s alignment of its energy policies to the rest of the European Union.
East West acquired four exploration concessions in the country’s 2010 10th bid round (Figure 2). The four blocks, EX-2 Tria, EX-3 Baile Felix, EX-7 Periam and EX-8 Biled, cover 1,000,000 acres within the Romanian sector of the prolific Pannonian Basin region of western Romania. The acreage was previously controlled by Petrom, the national oil company, and has not been actively explored for the last two decades.
The Company has entered into a farmout agreement with Naftna Industrija Srbije (NIS) whereby our partner will fund the total cost of the Phase I work program, currently estimated at €60 million. The farmout has been approved by the National Agency of Mineral Resources (NAMR). East West will retain a 15% carried participation interest in the four blocks. Should the partners elect to extend any of the four blocks into Phase II, NIS will continue to fund 100% of the exploration costs through Phase II, which include three additional exploration well commitments on each block. Once a commercial discovery is made, East West will be responsible for its share of field development and production costs.
NIS is viewed as a partner of choice in Romania. It brings a number of strengths and competitive advantages to the East West program, including a) an active, capable operator in the region, currently managing all E&P exploration and production rights in neighbouring Serbia (offsetting Blocks 7, and 8), b) in-depth knowledge of the regional geology including operating on offsetting acreage in Hungarian portion of the Pannonian Basin, c) access to an extensive regional geology and field producing data base, and d) committed to extensive E&P and downstream investments in Romania.
The acreage lies in close proximity to a number of fields which have been found along the Romanian - Hungarian border region as shown on Figure 3. East West and NIS plan to focus the exploration program on conventional oil & gas targets in proximity to existing fields using new 3D seismic data.
Under the minimum work program commitments for the four blocks, the Company will acquire a total of 880 km of 2D and 600 sq. km. 3D seismic data and drill 12 exploration wells during the Phase I, two year work program. In preparation for the upcoming Phase I field work, the Company and NIS have been actively studying historical reports and available technical data. In the order of 25 conventional leads and prospects have been mapped to date on acreage across multiple play types, such as basement fractured reservoir plays, syn-rift clastic structural and stratigraphic traps, and post-rift deltaic sequences which hold structural and stratigraphic traps. These leads and prospects will be high-graded for drilling once block ratification has been received from the government. An example of the prospectivity is demonstrated in Figure 4 which shows a syn-rift sequence with amplitude anomalies against a basement fault setting.