The Bitlyanska exploration and development licence covers an area of 390 square kilometres and the Group has a 96.5 per cent to 97.1 per cent working interest, varying with production. There are three hydrocarbon discoveries in this licence area: Bitlya, Borynya and Vovchenska. The Borynya and Bitlya fields hold 211.54 mmboe (2008: 188.6 mmboe) and 113.92 mmboe (2008: 114.0 mmboe) of contingent resources respectively, while no reserves and resources have been attributed to the Vovchenska field.
In December 2009, the Group received a five year extension for this licence until December 2014. The required work programme includes: (a) seismic surveying; (b) drilling of Bitlya 2, re-entering of Borynya 3 (testing and possible completion for production) and drilling of two additional wells; (c) commencement of a pilot commercial exploitation of Vovchenska 11 well; and (d) conducting geological and economic estimation work on the Vovchenska field.
In November 2009, drilling of the Borynya 3 well was terminated at a drilled depth of 5,325 metres and the well was suspended for future evaluation. Borynya 3 was a licence obligation well and confirmed that an active hydrocarbon system is present over an extended interval. Several discrete gas bearing pressure regimes were penetrated and good quality data were obtained from the well. In June 2009, Borynya 3 tested gas from a secondary reservoir at an estimated maximum rate of 128,000 cubic metres per day during a limited duration drill stem test.
The Borynya 3 well was designed to test the potential of the the Verchovinsky formation at a projected depth below 4,800 metres. According to Soviet era records, this interval in the Borynya 2 well tested 400,000 cubic metres of gas per day in an open-hole test before the test failed due to formation blocking the test tool. The possible extent of the Borynya structure is currently poorly defined as there is a lack of adequate seismic data due to the complex geology and the challenges of acquiring good seismic results in the terrain of the Borynya region.
Prior to changing strategy earlier in 2009, the Group had planned to drill the Bitlya 2 well following Borynya 3. This well has been postponed into the extension phase of the license, pending a decision to commence exploratory drilling. Bitlya is a 3,000 metre normally pressured gas field which has already been drilled by the Bitlya 1 well. This well established the presence of hydrocarbons in a structure identified by Soviet era 2D seismic. This has been reprocessed and reinterpreted using modern geophysical techniques, including generation of a structurally balanced section to verify the tectonic activity in the area. Although the structure is confirmed by the interpretation the geometry and extent of the closure will need to be confirmed by a targeted seismic study planned for 2010.
