Lundin Petroleum has signed a Production Sharing Contract (PSC) for the exploration and production of oil and gas in Block 10A, located in the Anza Basin of Northwest Kenya.

Introduction
Originally identified as a prospective basin in Lundin Petroleum’s regional evaluation of the oil and gas potential of the Horn of Africa, the Anza Basin became a focal point for the new ventures technical team in 2006-7. The Anza Basin is an extension of the prolific Muglad Basin of Sudan where more than 500,000 barrels of oil per day are currently being produced and Lundin Petroleum and partners continue exploration efforts in Block 5B.

On October 4, 2007, following successful negotiations of a work programme and commercial terms, a production sharing contract for Anza Block 10A was signed in Nairobi. Block 10a spans 14,748 sq km (3.6 million acres) over the north-western most portion of the Anza Basin.

Block 10A is highly under explored, but the limited penetrations to date seem to indicate that a working petroleum system is at least locally present. This system includes mature oil-prone lacustrine source rocks of Lower Cretaceous age, quartz-rich fluvial sandstone reservoirs of Lower to Upper Cretaceous age, and multiple structural closures related to the original rift faulting geometries or post-Cretaceous inversion.

The north-western portion of the Anza Graben is extremely under explored and poorly understood due to the lack of seismic data and exploratory drilling. This lack of exploration can be attributed to the fact that Neogene volcanics are present at the surface and in the shallow subsurface which has hampered efforts to collect quality seismic data in the late 1980’s. No efforts to acquire seismic data has occurred since 1988, and with advancements in modern seismic acquisition and processing technology, Lundin Petroleum is confident that the subsurface can be imaged with improved clarity, thus potentially leading to successful exploration efforts. In addition, the existing seismic grid within areas where surface volcanics are absent, remains coarse (5 km spacing) and it appears that many, if not all of the wells, were likely drilled off-structure.

Within Block 10A, the Anza Graben appears to be compartmentalized into three smaller sub-basins, the Chalbi sub-basin, the Bolol Basin and the Gala Basin. It’s important to note that each of these sub-basins covers more than 4000 sq km (almost one million acres each) and apparently has a varied geologic history which remains poorly understood.

Prospects and leads within Block 10A can only be identified subsequent to execution of Lundin Petroleum’s work programme, but it is envisioned that prospects analogous to the Muglad Basin of Sudan will be eventually mapped. Recoverable resource potential for individual prospects will likely range from 50 to 500 MMBO. As in the Muglad Basin, crude oils are expected to be waxy, low Gas-oil ratio, and possess API gravities ranging from 20 to 35.

Work Programme
Lundin Petroleum’s exploration strategy is to first develop a clearer understanding of the sub-basin geometry within the Anza Graben over Block 10A. In order to develop this understanding, a block-wide airborne gravity survey (~15,000 sq km) will be conducted, which will result in a better definition of the sub-basins and areas of local inversion. In conjunction with the gravity survey, Lundin Petroleum will reprocess all existing seismic data (~2600 km) and will conduct field geology exercises in the block to remap and sample critical reservoir and source rock outcrops.

Following the gravity survey, seismic reprocessing and re-interpretation of the sub-basin geometries, Lundin Petroleum will acquire approximately 1000 km of new 2D seismic data. The majority of the programme (~750 km) will be focused on the Chalbi “window” where there are no volcanic rocks at the surface, and will represent “infill” data to tighten up the vintage seismic grid. This denser data coverage will enable mapping of the prospects with confidence and help identify prospects which have not undergone significant post-migration re-structuring, believed to be the cause of past failed wells. Due to the lack of surface volcanics and the presence of good quality vintage seismic data, Lundin Petroleum has very high confidence that this portion of new 2D seismic will result in clearly imaged, good data, that will be the key to identifying drillable prospects within the Chalbi “window”. It is important to re-emphasize that only three wells have been drilled in the Chalbi “window” or sub-basin, which alone, spans over 4400 sq km, or about 20 North Sea blocks.

An additional “exploratory” seismic programme (~250 km) will be acquired over the surface volcanics in an attempt to image the unexplored Bolol and Gala sub-basins. Lundin Petroleum will use state-of-the-art geophysical techniques, which have advanced considerably since the late 1980’s, to develop a clear image of the subsurface. If these test lines over the surface volcanics are successful, Lundin Petroleum will need to acquire additional infill lines to further define the prospectivity within the Bolol and Gala sub-basins. If these test lines do not succeed in imaging the sub-surface below the volcanics, Lundin Petroleum’s emphasis will remain on the Chalbi “window”.