this will explode next week

IMPROVED weather has let Turkey-focused juniors Eureka Energy and Incremental Petroleum resume work at their respective operations. Meanwhile, Incremental is also lauding changes to Turkey's petroleum legislation, which it says will enable the company to earn higher revenue from its Selmo oil field.

Incremental's Selmo operations in Turkey

Earlier this month, Eureka and Incremental said heavy snow and extremely cold temperatures had forced them to halt their activities.

But today Eureka said its operator was preparing to test the Koyunlu-1 well, now that weather and road access in the area had improved. The acidising and testing operations are expected to take about a week.

In addition, Incremental has returned its 100%-owned Selmo oil field to full production, when the last remaining well with frozen flow lines was put back online.

Due to the weather, about 7500 barrels of Selmo oil were deferred.

"In contrast with much of Europe, night-time temperatures at Selmo have remained substantially below zero for over a month, with daytime temperatures often also below zero. The ground is still frozen in many areas," the company said this morning.

"The application of new equipment purchased over the last year, plus continued efforts from our Selmo staff have minimised the disruptions to production."

Sunny outlook for explorers in Turkey

Following five years of consultation between the industry and government, the Turkish parliament passed the Petroleum Law last week.

Of particular interest to Incremental is the new royalty regime, designed to encourage operators of older, smaller oil fields such as Selmo to re-invest to increase production.

Under the old legislation, Incremental was required to pay the Turkish Government 12.5% in royalties. Now the Government will collect 1.7% of royalties on the first 1000 barrels of oil produced per well, increasing to 5% for the next 4000bbl.

This means that Incremental will pay a net royalty of about 3.2%.

As well as the new royalty regime, Incremental said other legislative changes include:

Production licence tenure extended by 10 years;
Five-year tenure on exploration blocks (plus four years with extensions on onshore exploration acreage (previously four plus four);
Requirement to lodge a bond of 2% of proposed exploration program for new applications or renewals.

AURORA Oil & Gas says stimulation operations at the 26-2H development well at North Belridge, California are due to begin in the next few days.



Location of the Aurora's North Belridge oil field in the San Joaquin Basin


In its quarterly report, released late yesterday, the Perth-based company said 26-2H has reached total depth of 4457m.

Aurora said shortly after the end of the quarter a steel liner was successfully run to total depth and the well was suspended waiting on reservoir stimulation.

The North Belridge oil field has estimated potential P50 reserves of 60 million barrels of recoverable oil and 40 billion cubic feet of gas.

The company has said private US operator Texas Crude Energy estimates the potential recoverable reserves from the development well to be about 600,000bbl of oil.

The initial production rate from NB 26-2H is believed to be over 500 barrels of oil per day.

Aurora said due to the nature of the reservoir, some water production is expected at the outset and this will continue through the life of the field.

The company has a 16.25% interest in the 10-well North Belridge Oil Development Project.

In its report, Aurora also said the well testing program at its Sugarloaf-1 joint venture in Texas has been finalised and operations there are due to begin next month.

During the quarter a number of "encouraging" gas shows were encountered during drilling at the well, both in the primary target formation and in Cretaceous aged carbonates at shallower depths, it said.

Following wireline log interpretation, the joint venture decided to run and cement a production liner and develop a program for the fracture stimulation and testing of the zones of potential interest in the primary target formation.

Sugarloaf-1 partners are Texas Crude Energy (operator with a 41.5% stake), Aurora (20%), Adelphi Energy (20%), Eureka Energy (12.5%) and Empyrean Energy (6%).