The Company anticipates that 2011 will be a pivotal year in its progression with multiple exploration wells planned to spud during the year, over 4,000km (gross) of two dimensional seismic ("2D seismic") to be acquired and an extensive Full Tensor Gravity ("FTG") program planned to aid in assessing the overall prospectivity of the Tertiary and Cretaceous Rifts. The Company's Board of Directors has approved a $43 million (net) capital budget ($163 million gross exploration expenditures).
Tullow has taken over operatorship and are currently in the process of undertaking Full Tensor Gravity ("FTG") surveys and finalizing the prospect and lead inventory on Block 10BB. FTG is an airborne, high resolution gravity mapping tool which has been successfully utilized in the Lake Albert area of Uganda by Tullow, where gross discovered resources are over 2 billion barrels of oil. This technology will be utilized to provide basement image faulting, reduce uncertainty surrounding the structural configuration and to delineate structures to narrow the focus for subsequent 2D seismic surveys. Environmental impact assessments have been completed on Block 10BB over four potential drill sites and Government permits have been issued. Exploratory drilling is expected to commence in the third quarter of 2011.
FTG will be undertaken on the remainder of the Tertiary Rift blocks (South Omo (Ethiopia), Blocks 10BA, 12A, 13T (Kenya)), all of which will be operated by Tullow. The South Omo FTG survey is nearly 50% complete and a second plane has been contracted to accelerate the Kenyan surveys beginning in June of this year. 2D seismic operations are planned to commence during Q3 2011 and continue through the year on all of these blocks. The 2D seismic acquisition programs on these blocks are planned as follows on a gross basis; 1,000km on the South Omo Block, 1,300km on Block 10BA, and 500km on each of Blocks 12A and 13T.
The Company has completed a block-wide airborne high resolution gravity and magnetic survey on the Rift Valley Block in Ethiopia. In addition, the Company has utilized a specialized satellite imagery technique to observe natural oil seepage on several of the rift valley lakes within the new block. A team was mobilized in early March to ground truth and sample the oil slicks. Samples have been collected and are being analyzed in a US based geochemical laboratory.
In Block 10A, Kenya, the Company completed recording approximately 800km (gross) of 2D seismic in the first quarter of 2011. Seismic data acquired is currently being processed. The Company has reprocessed all available vintage seismic data with the objective of improving the imaging of the data acquired in the late 1980s. New play concepts have been developed based on the reprocessed data in combination with vintage drilling data. Tullow has taken over operatorship of this block and exploratory drilling is expected to commence in the fourth quarter of 2011.
In Block 9, Kenya, previous operator CNOOC and partner OPIC CHAD elected to relinquish their rights to the block subsequent to the drilling of the Bogal gas discovery. The Company and partner Lion Energy opted to continue into the First Additional Exploration Period which spans 3 years and carries a commitment of one exploration well to be drilled to at least 1500 meters. Current exploration activities in Block 9 are focused on the acquisition of 600km (gross) 2D seismic survey focused on the oil prone Kaisut sub-basin. The seismic crew has recently commenced recording and is anticipated to be completed at the end of the third quarter of 2011.
The Company has initiated a gas commercialization study to better understand alternative options for monetizing natural gas in East Africa, in anticipation of performing extended well tests on the potentially significant gas discovery that resulted from drilling the Bogal 1-1 well in 2010.
The Company completed its seismic acquisition program in the Company's Ogaden area of Ethiopia, acquiring 500 km of 2D seismic in December of 2010. The new data has been integrated with existing seismic to generate a series of new prospect maps. The Company continues to focus efforts on the large El Kuran prospect in the Blocks 7/8 license. The feature was de-risked in 1972 with two wells drilled by Tenneco; both wells recovered small amounts of light oil from Jurassic fractured carbonate reservoirs near 5000 feet. The Company contracted a Dubai-based consulting firm with extensive experience in appraising and developing analogous low porosity carbonate oil reservoirs in the Middle East. The consulting firm will evaluate the resource potential of the El Kuran discovery in addition to offering various options for appraisal and development of the accumulation. The Company plans to drill one well on the El Kuran prospect in 2012 in an attempt to establish commercial oil reserves. The Company holds 55% interest in both Blocks 2/6 and 7/8 licenses.
In Ethiopia, in the Adigala Block, the Company has completed interpretation of the 500 km of 2D seismic that was acquired during 2009. Additional geological and geophysical work is being contemplated, as part of a proposed one year extension. Earlier completed surface geology and sampling has documented the presence of excellent quality source and reservoir along the basin margin. The Company holds a 50% working interest in this Block.
The Company completed the acquisition of Centric Energy Corp. in the first quarter of 2010, obtaining a 25% interest in Block 7 and 11, which are operated by Heritage Oil Corporation ("Heritage"). Heritage has entered into an agreement with a 2D seismic subcontractor, and is currently in the process of acquiring reconnaissance seismic. The Company's share of seismic expenditures and the drilling of one exploration well will be carried by Heritage.
During 2009, in the Dharoor Block of Puntland, Somalia, the acquisition of 782 kilometers of good quality 2D seismic (comprised of 15 grid lines) was completed. The Company has combined 555 kilometers of previously acquired data into the seismic database which has been mapped to determine exploration well locations. Exploration activities in Puntland are focused on drilling the first exploration well in Somalia in over 20 years. The Company has recently signed a letter of intent with a drilling contractor and plans to spud the first well in the Dharoor Block during the third quarter of 2011. A second well in the Dharoor Block is planned to commence following completion of the first exploration well.
In the Nugaal Block in Puntland, Somalia, AOC acquired more than 4,000 kilometers of existing good quality 2D data which was recorded in the late 1980's. This has enabled the Company to work up an inventory of drilling prospects from which the first exploration well locations will be selected.