Zarara Spuds Initial Well in Blocks L4 & L13 Kenya For Pate Drilling Campaign

Zarara Oil & Gas Limited (“Zarara”), a wholly owned subsidiary of Midway Resources International, announces the spudding today of Pate-2 well, that commences its Pate Drilling Campaign on its production sharing contracts (“PSCs”) on blocks L4 andL13 in Kenya.

The blocks are located in the coastal region near Port Lamu, the destination port for the LAPSSET corridor infrastructure corridor currently under development by the Kenyan Government. The civil engineering works on Pate Island in preparation for the drilling campaign were completed in December 2017. These included the preparation of a temporary jetty near Mtangawanda on Pate Island, repair of local access roads, clearing the well site, construction of reinforced concrete bases for the drill rig and setting of 30 inch conductor pipe for two wells.

Zarara contracted a top-hole drilling rig from Drilling Spares & Services Limited (“DSSL”) an experienced Kenyan drilling company to drill and run 20 inch casing for both Pate-2 and Pate-3 wells to 300 meters. Cementing will be undertaken by Baker Hughes GE. The rig was mobilized from Nairobi, having previously set conductor pipe and drilled a number of top holes for Tullow Oil in the Lokichar Valley.

Separately, Zarara has also contracted the Sakson Rig SK604, a 2,600HP rig owned by Sakson Drilling and Oil Services DMCC for the campaign. The rig is currently being mobilized from Algeria to Mombasa, Kenya and from there to Pate Island. It will complete the drilling on each well to a target depth of 4,500m.

The drilling campaign comes some 48 years after Shell-BP drilled Pate-1, a natural gas discovery well in 1970. That well was plugged and abandoned due to downhole gas control issues and the fact that there was no market for natural gas in the region at that time.

Chairman, Dr Mark Bristow commented: “We celebrate the reaching of this exciting and significant milestone and I thank everyone who has played a role in getting us through the many challenges we have had to face to get to this point, management, Government, Ministry and County officials alike. We believe this brings us a step closer in being able to partner with Kenya through the Ministry of Petroleum and Mining in delivering a natural gas fired electricity generation facility initiative to support Kenya’s ongoing development as a leading African economy.”

The current drilling campaign follows a 4 year evaluation program undertaken by Zarara which included acquisition, processing and interpretation of extensive block-wide gravity-magnetics data, the acquisition, processing and interpretation of 400 line kms of transition zone 2D seismic over the original Pate-1 discovery area, and integration of this new data and analyses with the available historical regional exploration, seismic and drilling data.

The initial well in the current campaign, Pate-2, has been stepped out some 300m from the Pate-1 well and is targeting two hydrocarbon horizons and a final depth of 4,500m. The geological targets are the basal Kipini sandstones that flowed gas in Pate-1; and the Paleocene / Cretaceous sands that are believed to underlie it. The campaign is being supervised by drilling specialists Norwell Engineering under Zarara’s management. Each well is expected to take 100 days to drill, test and complete for production. Regular progress reports will be issued.

CEO, Peter Worthington commented: “Notwithstanding difficult industry and capital market conditions, and 5 years of extreme dedication by our team, we are all proud of where we find ourselves today. The months ahead will be both exciting and testing and we plan to keep our Kenyan stakeholders and supporters fully engaged on this journey. Success will deliver to Kenya a material enhancement of its energy and electricity solutions as well as adding emphasis to local economic development in a strategic development node of Kenya.

Zarara’s Nairobi based Chief Operating Officer, Austen Titford, explained that following a successful confirmation of the original Pate-1 gas discovery with Pate-2 well, a second well Pate-3 will be drilled directionally from the same well-site. The second well is designed to confirm the resources necessary for Phase 1 of Zarara’s gas monetisation strategy involving generating electricity and/or micro-scale LNG.