HKN Energy declares commerciality of Swara Tika structure in Kurdistan

Source:HKN Energy Ltd.

HKN Energy Ltd. (HKN) is pleased to announce that it has notified the Kurdistan Regional Government of Iraq (KRG) that the Swara Tika discovery is a “Commercial Discovery” pursuant to the terms of the Sarsang Production Sharing Contract.

HKN, as operator of the Sarsang Block, has drilled two wells on the Swara Tika structure. The Swara Tika-1 exploration well was spudded in August 2010 and drilled to a total depth of approximately 3,800 meters. Daily flow rates were established from two Triassic tests estimated at more than 7,000 barrels per day (bpd) of 35°-39° API oil with associated gas. The Swara Tika-2 well was spudded in December 2011 and drilled to a total depth of approximately 3,700 meters. The Swara Tika-2 well established natural flow from five Triassic zones totaling more than 18,000 bpd of 35°-39° API oil and 14 million standard cubic feet (mmscf) of associated gas on a 2” choke with only a portion of each interval perforated. In addition, during the drilling of Swara Tika-2, HKN successfully recovered significant quantities of heavier Jurassic oil to the surface using underbalanced drilling techniques. The Swara Tika-2 well is located 4 kilometers away from the Swara Tika-1 discovery well and the hydrocarbon bearing zones of interest are 150 meters downdip from the Swara Tika-1 well. Both wells have approximately 1,800 meter gross stratigraphic sections with indications of hydrocarbons.

“We are pleased to declare a commercial discovery relating to the Swara Tika structure, which is an important milestone as we move toward the full development of this discovery,” said Russell Freeman, Chief Executive Officer, HKN Energy. “We continue to appraise the other structures on the Sarsang Block as permitted by the KRG, and we look forward to working with our co-venturers and the KRG to further develop this world class block.”

HKN will submit a development plan for the Swara Tika discovery to the KRG during the 2nd quarter of 2014 for the KRG’s consideration and approval. HKN intends to begin production from the Swara Tika-1 well in May 2014 through the existing facilities. In addition to declaring commerciality on the Swara Tika structure, HKN will continue the ongoing operations within the 682 square kilometer Sarsang Block, including drilling in the East Swara Tika, West Swara Tika and the Mangesh structures as agreed and permitted by the KRG.

“Kurdistan continues to show tremendous promise, not only in the richness of its energy reserves but also in the determination of its people to enable commercial development of its natural resources,” said Ross Perot, Jr., HKN Energy’s founder. “Our team has been working in Kurdistan since 2006 and remain honored to be able to explore and develop one of the last great onshore oil frontiers in the world.”

HKN Energy holds a 37 percent participating interest (with an option to acquire an additional 5% from the KRG which HKN has initiated) in the Sarsang Block. The other Sarsang contractors include Marathon Oil KDV B.V., which holds a 20 percent participating interest and Maersk Oil, which holds an 18 percent participating interest. The remaining interest on the block is held by the KRG.



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