CALGARY, ALBERTA--(Marketwire - Jan. 15, 2013) - MENA Hydrocarbons Inc. ("MENA" or the "Company") (TSX VENTURE:MNH) is pleased to announce the following operational update.
Activities on the Company's 100% owned Lagia oil field in Egypt have re-commenced. A new progressive cavity pump ("PCP") has been installed in the Lagia well #9 which has produced over the last 12 days at an average stabilized rate of 90 barrels per day of approximately 16 degree API oil gravity. This PCP replaces the original sucker rod pump that was previously installed in Lagia #9.
MENA has also completed installation of required production facilities in the field with three oil storage tanks, a water tank, and a 500 barrel fuel tank and has connected all producing wells with flow lines.
Lagia wells #8 and #10, which were also drilled in 2012 and designed for steam injection, will be placed on production following an initial steam injection cycle to begin next month. The Company has signed an agreement with an experienced Middle East steam operator, Steamtech and Co. LLC, to provide steam injection equipment and personnel to start the steam injection operation in the field. Given the quality of sandstone reservoir and oil gravity, it is expected that production volumes from the wells will be significantly improved.
The two remaining production wells in the field, Lagia #6 and #7, were drilled by a previous operator and were not completed with thermal casing, however, their flow rates are expected to increase from their current 22 barrels per day with steam injection into the other nearby wells.
DeGolyer and MacNaughton Canada Limited evaluated the Lagia oil field and estimated the field's proved plus probable reserves to be 4.0 million barrels of oil and its proved plus probable plus possible to be 10.5 million barrels of oil. See below for additional information regarding our reserves disclosure. The Company plans to develop its reserves with primary and thermal recovery methods. The engineered development plan calls for up to 55 wells for full development of this current engineered Lagia fault block. MENA believes adjacent fault blocks may also be oil bearing.
The Company also plans to drill a 5,000 ft exploration well in the first half of 2013 to identify the source of 38 degree API oil that was recovered in the Lagia concession by a previous operator while drilling South Lagia #1. A location has been selected based on existing seismic data, and materials for the well have been purchased.
To date, the Company has delivered 4,600 barrels of crude oil inventory for sale to the General Petroleum Corporation of Egypt at an agreed price of $77 per barrel.
MENA is proceeding to complete the previously announced $500,000 private placement and has also received approximately $2.5 million of advances by certain officers, directors and shareholders of the Company. In addition, the Company is continuing its efforts to sell its Montana assets. These funds will be utilized to settle some of the Company's outstanding payables and continue operations in Egypt.
About the Lagia Oil Field
MENA is the sole participant in the joint venture company with EGPC, PetroSinai which operates the Lagia Development Lease covering a 32 square kilometre block of land located on the Sinai Peninsula, directly adjacent to the Gulf of Suez. In addition to the wells drilled by MENA in 2012, four wells had been drilled between the years 1949 to 2000 that had identified the Lagia oil field. Three producing oil fields, Sudr, Matarma and Asl, are located as close as 26 km to the north of the Lagia oil field.
About MENA Hydrocarbons
MENA Hydrocarbons is an international oil and gas company focused on growing an asset base of production, development and high impact exploration in the Middle East and North Africa region. In Egypt, MENA owns and operates the development lease for the Lagia oil field, a 32 square kilometre onshore block located on the Sinai Peninsula, directly adjacent to the Gulf of Suez. In Syria, MENA owns a 30% participating interest in Block 9 in Syria, a 10,032 square kilometre onshore block prospective for crude oil, natural gas and condensate. In the United States, MENA owns 6,242 gross acres (with an 81.2% average working interest) in Northwestern Montana with light/medium oil reserves. MENA's shares currently trade on the TSX Venture Exchange under the symbol "MNH".
Forward looking information
This news release contains forward-looking information relating to reserve estimates and planned development and exploration activities on the properties in which the Company has interests. Such forward-looking information is subject to important risks, uncertainties and assumptions. The results or events predicated in this forward-looking information may differ materially from actual results or events. The recovery and reserve estimates of MENA's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. As a result, you are cautioned not to place undue reliance on these forward-looking information.
Forward-looking information is based on certain factors and assumptions regarding, among other things, the Company maintaining its stock exchange listing; the availability of financing on acceptable terms or at all and the timing such financing is needed; the impact of increasing competition; the general stability of the economic and political environments in which the Company operates or owns interests; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its oil and natural gas products, and other similar matters. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Forward looking-information is subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what is currently expected. These factors include risks associated with the Company's ability to successfully maintain its stock exchange listing, the availability of capital on acceptable terms or at all and the timing such capital is needed, instability of the economic and political environments in which the Company operates or owns interests, oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, the inability to settle the definitive terms of the farmout arrangements, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, reliance on key personnel, regulatory risks and delays, including risks relating to the acquisition of necessary licenses and permits, environmental risks and insurance risks.
You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company is under no obligation and does not undertake to update this information at any particular time, except as required by law.
About our reserves disclosure
The reserve estimates set forth in this news release have been evaluated by an independent qualified evaluator in accordance National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook and is effective December 31, 2011. The reserves have been categorized in accordance with the definitions as set out in the COGE Handbook, which are set out below:
"Proved reserves" are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
"Probable reserves" are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
"Possible reserves" are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.