United Hydrocarbon International Corp has announced the successful results of drilling two wells on its Production Sharing Contract area in the Doba Basin, located in southern Chad.
The ‘Belanga North-1’ exploration well was drilled to a total depth of 1,392 meters and encountered three oil-bearing sand intervals; two in the targeted Upper Cretaceous ‘YO’ sands with a combined thickness of 16.5 meters (net), and a previously untested 5-meter (net) sand in a shallower horizon. A 14.5 meter section of the ‘YO’ sand was perforated and flow tested. At the end of a 15-hour cleanup and flow test period with an 18% pressure drawdown, the final flow rate was 680 barrels of oil per day with no water. Oil was also recovered from the previously untested 5-meter thick sand with a wireline testing tool. Subject to further analysis, the oil recovered during the flow tests appears to be similar in quality to the oil in nearby fields that have been in commercial production since 2004.
The Company also drilled a well at ‘Belanga 1A’ to further delineate the oil discovery at Belanga 1, originally drilled in the 1970’s by a previous operator. The well encountered a 9-meter oil zone in the ‘YO’ sand, approximately 50% thicker than the oil zone in the original discovery well. Crude oil was produced to surface before the flow test was terminated due to a mechanical problem. The Company plans to conduct a long-term flow test at a later date.
‘We are very encouraged by the significant discovery results of our 2014 drilling program in the DOC and DOD blocks in southern Chad,’ commented Ned Goodman, Chairman of the Board and Chief Executive Officer.
‘There is substantial additional evaluation work ahead of us to prove the ultimate value of the overall drilling program. Extensive 3D seismic survey and development wells are needed to confirm the commercial viability of the Belanga discovery, as well as substantial drilling to prove the viability of the potential magnitude of the Lake Chad area.’
In connection with the Belanga discovery, the independent members of the Company’s board of directors have agreed to grant a $10 million discovery bonus to Dundee Corporation in recognition of the contribution made by the Dundee Group and its senior officers and directors, towards the success of the Belanga discovery, especially including its extensive risky financial support during a time that the Company was unable to secure alternative financing. Dundee has agreed to accept 20 million shares of the Company in lieu of paying cash for this discovery bonus and for Dundee’s assistance.
In addition, and in order to simplify the capital structure of the Company, the board of directors has removed the necessity of the Company’s shares trading above certain specified values in order for those holders of Performance Warrants to exercise their warrants. This will allow holders of the warrants to purchase shares of the Company at the exercise price of the warrant at their discretion.