On the 15th of February 2007, AOGC closed on the purchase of a Russian oil company, Orneftegaz, in the Orenburg area.
The purchase price has been agreed at USD 5.5 Million, and at closing paid 10% of the purchase price and provided a loan to the company of approx. USD 2.5 Million. At the closing AOGC took control of 55% of the shares, and has a majority in the company’s board of directors, as well as complete control of the company’s financial and operational aspects. The remainder of the purchase price is to be paid when an extension of the license is secured, and at this point, AOGC acquires the remaining shares.
AOGC has contracted a seismic company to acquire a 3D survey on the license, which is a requirement from the authorities to get the license extension. This 3D survey has already begun, and will in all likelihood identify new and interesting prospects.
The company possesses a 63 sq.km license in Orenburg. In a previous release, AOGC stated that western consultants have made a reserves report which shows 7.2 MM (million) barrels P1 + 6.9 MM barrels P2 reserves totaling 14.1 MM barrels reserves plus considerable upside potential, based on available well and seismic data.
During 2001-2002 there was oil production on the license, and a total of 6 wells have been drilled on the license. Test production demonstrated the potential of 100-500 barrels per day per well. Due to lack of maintenance and investment, production ceased in 2002. AOGC’s short term strategy is to overhaul existing wells in order to start production as early as possible. When the result of the 3D survey is available later this year, AOGC will initiate an exploration program.
General Manager at AOGC says: “We expect that within a relatively short amount time, we will get 1-2 wells on production, by using relatively simple means. The other wells will require overhauls and workover programs. The production goal for the license in 2007 is to achieve a production of 700-1000 barrels of oil per day at the end of the year.”
In addition; AOGC has a strategy to grow through further acquisitions of companies and/or licenses.