12 November 2009
AIM: XTR
XTRACT ENERGY PLC
("Xtract" or the "Company")
Investment Update - Elko Energy
Xtract refers to the text set out below of a shareholder letter sent
by Elko Energy Inc. ("Elko") to its shareholders (Xtract owns
approximately 36.8% of Elko's issued share capital).
"Shareholder Update
Elko Energy Inc. ('Elko') is pleased to provide this further regular
update on the ongoing development of the Elko business.
Elko Business Update
Denmark
Following the reprocessing of approximately 3,000 km of seismic data
over our 02/05 Danish licence, Gaffney Cline and Associates (GCA)
have now completed an evaluation of the Chalk interval. The
evaluation has identified a large Chalk channel some 90 km long by 10
km wide across the 02/05 licence. It has the potential to be a good
reservoir quality sediment and also a possible conduit for
hydrocarbon migration. The Chalk channel has the potential to hold a
considerable volume of hydrocarbons which in a moderate case scenario
could be 375 million barrels of recoverable oil.
This new Chalk prospect is in addition to the previously identified
deeper Rotliegendes sandstone prospect and the opportunity now exists
to evaluate both the Chalk horizon and Rotliegendes sandstone horizon
by drilling a single suitably designed well. Marketing of the Danish
opportunity with the focus on the GCA Chalk evaluation has commenced
within the industry. Ahead of entering the next phase of the
exploration licence in April 2010, an optional commitment to drill a
well has to be given to the Danish Energy Agency. The current
estimate 100% cost of drilling a well capable of evaluating both
horizons is US$15 million, excluding production testing (based on
quotations from Well Management consultancies). Elko holds an 80%
interest in the 02/05 licence.
Netherlands
The reservoir modeling of the P1 Block, P1-FA field has concluded
that the optimal development plan will required five long reach
horizontal wells to sustain a plateau production rate of 120 mmscf/d.
An appraisal well location has been identified and a well proposal is
under preparation for submission to the Dutch state authorities.
On the P2 Block, reprocessing of previous 3D seismic is ongoing and
will be complete by 2009 year end. Early fast track data has been
analyzed and shows improved imaging over the existing discoveries and
prospects. Also an additional new prospect has been identified.
Elko continues to hold discussions with a number of potential new
financing partners to replace Oyster via a promoted farm out of a
percentage of Elko's working interest in Blocks P1 and P2.
Securing a financing partner ahead of entering the next phase of the
exploration licences on both Blocks P1 and P2 remains a priority for
Elko. The date for this optional commitment to drill an appraisal
well on P1 and a well on P2 is February 2010. It should be noted that
Elko previously secured an eight month extension on the P1 licence
first exploration phase from June 2009 until February 2010. The
current cost estimate of drilling two wells on P1 and P2 is US$55
million (based on quotations from Well Management consultancies).
Elko holds a 60% interest in the P1 and P2 licences.
Licence Commitments
Further details of Elko's licence commitments and guarantees can be
found in note 17 of the Company's Audited Consolidated Financial
Statements for the year ended December 31, 2008.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this President's Message
that are subject to significant risks and uncertainties. These
statements concern Elko's plans, expectations and objectives for
future operations of Elko's licenses in the North Sea."
Peter Moir
President
November 11, 2009
Further information on Elko can be found at www.elkoenergy.com
Elko Energy Inc. is not subject to the AIM Rules and the information
contained in this announcement has not been reviewed by a named
"qualified person" as defined and required by the AIM Note for
Mining, Oil and Gas Companies.
Enquiries please contact:
Xtract Energy Andy Morrison, CEO +44 (0)20 3205 1148
Smith & Williamson David Jones +44 (0)20 7131 4000
Corporate Finance Azhic Basirov
Barrie Newton
About Xtract Energy
Xtract identifies and invests in a diversified portfolio of early
stage energy sector technologies and businesses with significant
growth potential. The Company aims to work closely with the
associated management teams to achieve critical project milestones,
to finance later development stages, and to build and crystallise
value for all shareholders and partners.
For further information on Xtract please visit www.xtractenergy.co.uk
A short description of the principal assets of Xtract is set out
below. These assets are either held directly or through wholly owned
subsidiaries of the Company.
Extrem Energy AS ("Extrem Energy")
Extrem Energy is an exploration and production joint venture with
Merty Energy of Turkey. The JV's aim is to create a new medium-sized
oil and gas exploration and production business, initially focused on
Turkey where Merty Energy has particular experience and expertise.
Extrem Energy has a portfolio of licence interests including the high
potential prospect at Candarli Bay in south-west Turkey. Xtract owns
34% of the issued share capital of Extrem Energy.
Elko Energy Inc. ("Elko")
Elko is a Canadian registered oil & gas exploration company which has
interests in exploration and production licences in the Danish and
Dutch North Sea. Its major asset is in the Danish North Sea; an 80%
interest on 26 offshore blocks in a 5,400 sq km exploration and
production licence close to the prolific Central Graben oil field.
Technical work indicates the potential for significant reserves. Elko
also holds a 60% operating interest in gas-bearing license blocks P1
and P2 in the Dutch North Sea. Xtract owns approximately 36.8% of
Elko's issued share capital.
Zhibek Resources Ltd ("Zhibek Resources")
Zhibek Resources is an oil and gas exploration and production company
which has a 72% interest in the Tash Kumyr and Pishkoran exploration
licences in the Kyrgyz Republic. Xtract has entered a farm-out
agreement to fund a seismic and drilling programme for 2008-09.
Xtract owns 25.0% of the issued share capital of Zhibek Resources.
Xtract Oil Ltd ("XOL")
Xtract's wholly owned subsidiary, XOL, is focused on the development
of the Company's oil shale resources in Australia and the technology
for oil extraction from oil shale resources. Xtract has oil shale
exploration rights over mining tenements in the Julia Creek area of
Queensland. In addition to evaluating third party technologies, XOL
has been developing proprietary technology for the commercial
extraction of liquid hydrocarbon products from oil shale.
Xtract Energy (Oil Shale) Morocco SA ("XOSM")
XOSM is a joint venture with Alraed Limited Investment Holding
Company WLL, a company controlled by His Highness, Prince Bandar Bin
Mohd. Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed a
Memorandum of Understanding with the Office National des
Hydrocarbures et des Mines for the purposes of evaluation and
possible development of an oil shale deposit near Tarfaya, in the
south west part of Morocco. Xtract currently holds 70% of the joint
venture.
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