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<TD class=messageDetailText>KARLAVSKOYE DEVELOPMENT TO COMMENCE</TD></TR>
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<TD class=messageDetailTitleInvert>Tekst</TD>
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<DIV class=messageText><PRE>16th May 2011 TSX-V/Oslo Axess: TSU
Vancouver, Canada: - Transeuro Energy Corp.
("Transeuro" or the "Company") issues an update on
its Ukraine operations as follows:
Following the successful completion of testing
operations on Karlavksoye-101 the company intends to
commence development of the Karlavskoye field using
the strategy of vertical wells with multiple stacked
hydraulic fractures. The forward schedule is now to
complete between 3 and 5 hydraulic fracturing
operations on Karl-101 in the 3rd quarter this year
to achieve initial flow rates in the range of 10
mmcf/d (280,000 m3/day) and to commence production
into the adjacent pipeline shortly thereafter at a
sales rate around 5 mmcf/d (140,000m3/d). Results
from the final test also suggest the Karlavskoye
field is likely to be substantially larger than
previously reported.
The President & CEO, David Worrall commented on the
conclusions of the testing programme:
· Overall the test results suggest that the
Cenomanian reservoirs are best described as 'tight
gas' reservoirs albeit with 'sweet spots' of enhanced
performance, notable in the top (C12) and bottom
sections (C15). Tight gas reservoirs often do not
produce at all from the initial vertical wells and
normally require hydraulic fracturing or horizontal
wells to produce effectively.
· The results from this last test 'Test 3&4
combined' were adversely affected by the invasion of
drilling mud into the lower pressured, upper
intervals. Total mud losses while drilling the
sidetrack were around 100 m3, and we estimate around
30-40 m3 has been produced back from this top
interval so far. Had mud not invaded this zone it is
likely the gas flow would have been much higher.
Hydraulic fracturing is required to overcome the
detrimental affects of the mud invasion.
· The behavior of this last test is useful to
interpret the test results from the old wells drilled
in the 1970's. In particular in 'well 10' where the
old logging data suggests gas saturations in the
reservoir, but the well tests in intervals C12, 14,
15 and 16 all flowed only 'drilling mud and gas',
resulting in this well being defined as outside the
gas/water contact for the field (the field boundary).
Well 10 is located 700 metres to the north of the
present field boundary and 337 metres deeper in the
structure and it would establish a much deeper 'gas
down to' depth of 3841 metres sub surface. The latest
test data from Karl-101 suggests well 10 is probably
within the gas field boundary and if verified this is
likely to increase the size of the Karlavskoye field
significantly. The location of well 10 is illustrated
in the reservoir maps contained in the Company's 51-
101 reserves reports
(https://www.transeuroenergy.com/s/ReserveReports.asp).
· Fekete Associates Inc were retained by the
Company to prepare preliminary estimates of future
well performance based on hydraulic fracture models,
using data obtained from Karl-101 as supplied by the
Company. The model predictions indicate the Karl-101
well could deliver initial post frac production from
5 stimulated zones above 10 mmcf/d and sustained
production after 2 years in the order of 3 to 4
mmcf/d, with cumulative production over this period
in the range of 3.0 to 3.5 Bcf. The Company cautions
that there is no certainty to these predictions and
actual post frac performance may be higher or lower.
5 service companies, including 3 of the largest
international service companies have indicated their
interest in performing the fracturing operations on
Karl-101 later this year and detailed engineering
design activities are now ongoing. The Company is
budgeting $3 million for the fracturing operations.
Follow on Plans:
· The Company is now temporarily suspending the
Karl-101 well for a re-entry 3rd Quarter this year
and will release Dafora Rig 2 as soon as possible.
· Planning activities are underway to prepare
for the hydraulic fracturing operations 3rd Quarter
this year.
· Discussions have commenced with government
partners on the re-entry programme for hydraulic
fracturing, for the installation of the production
equipment and the tie in to the adjacent export
pipeline. Discussions will commence on a 12 month gas
sales contract to follow once the Frac operations are
completed.
· The Company will review the 'Statement of
Reserves' for Karlavskoye with Fekete Associates Inc
to include 'well 10' inside the field boundary. If
accepted this will increase the size of the field
substantially. The Company is investigating the
potential to re-enter well 10 to re-test and
hydraulically fracture the reservoir intervals C12 to
C16.
· The gas and liquids samples collected during
testing will be analysed to investigate if oil might
be producible at Karlavskoye and if exploration
potential exists for oil in the immediate vicinity.
· Planning will commence on a second well, Karl-
102, with the intention of drilling through the C12-
C16 intervals and down to 5000m to investigate the
previously discovered deeper reservoirs in the A-18
and A-21 intervals. After testing the deeper targets
with well will focus on production from the C12-C16
intervals. We hope to spud this well early in 2012.
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