The Galata area consists of the main field, Galata, and two satellite fields, Kavarna and Kaliakra, tied-back to the Galata production facility. With proven and recoverable reserves of 49 Bcf and proved and probable reserves of 81 Bcf, Galata thus far has produced roughly 1.42 MMcm/d. Melrose Resources wholly owns and operates the area.

The first offshore gas field development in the Bulgarian Black Sea coast is the Galata field, which is situated 12 miles (20 kilometers) offshore to the east of the port of Varma in a water depth of 115 feet (35 meters).

Galata was discovered by Texaco in June 1993, and confirmed by appraisal drilling three years later. Because the field was not deemed commercially viable, it was plugged and abandoned until Melrose acquired the gas field in January 1999. In January 2004, two production wells, GP No. 1 and GP No. 2, were drilled and completed. Both wells were tied-back to the Galata platform with production commencing several months later.

Kavarna

The Kavarna gas field is located in the Kavarna permit area of the Black Sea offshore Bulgaria, roughly 4 miles (7 kilometers) to the east of the Galata gas field and 5 miles (8 kilometers) to the west of the Kaliakra field.

Drilled by the Prometeu jackup, the discovery well, Kavarna No. 1 was drilled to a total depth of 2,899 feet (884 meters) and encountered a gas bearing Paleocene reservoir with initial reserves estimated at 47 Bcf. Shortly after drilling, a strong gas flux occurred in the wellbore, leaving the operator to plug and re-drill the well for safety reasons. The Kavarna No. 2 well was then drilled and encountered 125 feet (38 meters) of net gas pay with an average porosity rate of 27%.

Since the field is located in close proximity to the existing Galata facility, Kavarna will be subsea tied-back to the facility using a 6-inch-diameter flowline for production to commence by July 1, 2010.

Kaliakra

In 2008, Melrose Resources discovered the Kaliakra gas field, located in the Galata Block exploration concession offshore Bulgaria in the Black Sea. The operator performed seismic work on the discovery and estimated that Kaliakra contains reserves in the amount of 57 Bcf.

The Galata E3-Kaliakra discovery well was drilled by the Atwood Southern Cross semisub in January 2008. The well intersected the reservoir at a measured depth of 2,743 feet (836 meters) and found a gross hydrocarbon column of 46 feet (14 meters). Open-hole logging data indicates a net pay interval of 33 feet (10 meters) with an average porosity of 31% and high gas saturation. Due to the high quality of the reservoir, the operator did not perform flow testing; the well was suspended for use as a production well.

In August 2009, the Kaliakra-2 well was drilled to appraise the Kaliakra gas discovery. The appraisal well was drilled 1 mile (2 kilometers) to the west of the discovery well using the Prometeu jackup. Kaliakra-2 penetrated the top of the Paleocene reservoir interval at a depth of 2,679 feet (817 meters) and encountered 67 feet (20 meters) of net gas pay. The samples obtained from the well confirmed that the reservoir is of good quality, with an average porosity in excess of 30% high gas productivity.

The field received governmental approval on Nov. 6, 2009 and will be developed as a subsea tie-back to the existing Galata platform using a 10-inch-diameter flowline, situated 9 miles (15 kilometers) to the east of Kaliakra. First production is expected on Oct. 1, 2010.

Galata Re-Development

In 2009, it was decided that Galata will undergo a development program to convert the Galata field to a gas storage facility with a capacity of 1.8 Bcm. By doing this, the field's life expectancy is increased as its reserves are depleted, ensuring gas will still be provided to the Bulgarian gas market.

The field will be developed during three phases with the first phase focusing on the field's compression, tying-back the suspended Galata No. 2 well and install metering facilities. Phase 1 commenced during the third quarter of 2009.