Operations in Spain

Onshore Spain - Abiego, Barbastro, Binéfar and Peraltilla Exploration Permits

Serica 100%

Serica was awarded the Abiego, Barbastro, Binéfar and Peraltilla exploration Permits onshore northern Spain in November 2003. The Permits cover an area of approximately 1,100 square kilometres between the Ebro Basin and the Pyrenees and lie approximately 40 kilometres southeast of the Serrablo gas field. All four Permits lie within the Autonomous Community of Aragón.

An initial evaluation of the limited available seismic data in the area has concluded that a new 2D seismic survey would be required in order to image the deeper features regarded by Serica as of greater prospectivity than the shallower section tested by some of the earlier wells. Serica therefore carried out a seismic acquisition test programme in July 2007 in order to determine the acquisition parameters for a full survey. The data from the test line is of excellent quality and a full 2D seismic programme of around 350 kilometres will now be acquired in the autumn of 2007.

The four Permits lie on the trend of the Barbastro anticline, a surface feature that extends for over 100 kilometres. The deep section within the anticline - the early Mesozoic to late Paleozoic system linked to Alpine inversion of basement structures - has never been properly explored, due in part to the poor quality of the existing data but also to the inefficient drilling systems used in the 1960s and 1970s, when most of the earlier wells were drilled. Serica believes that the deeper system presents the best opportunities for potential gas reserves. Structural leads have already been mapped that could ultimately become prospects with the potential to contain several hundred bcf of gas. The Spanish gas market would readily absorb any gas produced from the Permits and there is a main gas trunk line in close proximity.

The requirement for Serica to commit by the end of year four of the Permits to drill a well in order to retain the Permits for a further two years has been extended to the end of year five by the government of Aragón, in order that Serica can acquire and process the new seismic data prior to making such commitment. It is likely that Serica will seek a farm-in partner during 2007.