The properties in Ukraine consist of coal bed methane permits in East Ukraine, as well as an interest in a revitalization program of up to approximately 2,000 plugged and shut-in natural gas wells, which are also located in Eastern Ukraine.
The MoU calls for Galizien to spend up to $5m in the first stage in connection with the drilling of the first ten new coal bed methane wells on the East Ukrainian CBM properties held by EuroGas Ukraine (a Ukrainian private company equally owned by EuroGas and OJSC NT Technologies of Kiev).
The agreement also calls for reservoir and core evaluation; and completion of the wells in order to earn a 33% undivided working interest in the CBM properties.
Galizien and EuroGas will be mutually responsible together with EuroGas Ukraine for choosing all well locations in East Ukraine for all of the operations associated with the work program.
The work completion program will consist of the drilling of 10 new wells to the appropriate coal bed methane formations, of which a minimum of two well locations shall be selected to include coring, logging and respective laboratory rock evaluation work.
The following completion program will consist of the application of Galizien’s licensed proprietary enhanced oil recovery technology, known as short radius stimulation (SRS) hydra-jetting technology, including the application of Siloxane fluids (SRS Process), in connection with the completion of the wells.
Galizien will be responsible for the operations associated with the drilling, completion and application of the SRS technology.
Wolfgang Rauball, chairman and CEO of EuroGas, said: “Our partnership with Galizien and its COO, Dr David Kahn, is expected to fast-track the development of our considerable CBM properties, starting with Eastern Ukraine. We will immediately begin reviewing our trove of technical data and start scouting well sites: we expect to begin drilling as early as fall 2010.”
