Niche Group (LON:NGP) , the AIM listed investment company with interests in onshore gas exploration and development activities in Turkey, reported this morning that its latest well, Gulhanim-2, had reached total depth and encountered three separate hydrocarbon-bearing zones. The news sent the Niche Group share price up by 4% to 7.62p.

The well operator, Arar Petrol ve Gaz AUPAS, drilled Gulhanim-2 on the Konya Block (4077) to 3,133m. Previously announced gas and gas condensate discoveries were made at shallow (post-salt) and intermediate (pre-salt) depths. A third, deeper (pre-salt), pay zone encountered a 38m gross interval of porous and permeable carbonates. A combination of oil and gas was encountered in each of the pay zones of the deeper discovery. Niche said the deeper zone encountered gas and gas condensate/oil at each of the three intervals, indicating the potential for near-term production of gas and oil from the well, initially from the deeper zone, in carbonates of the Caldag Formation. Fluid samples of the oil were tested on site and were confirmed to be a light gravity crude oil - ranging from 37 to 60 degrees API.

The operator has begun cleaning the well and stabilising the well pressure in anticipation of production testing from the Caldag pay zone soon. During testing the operator intends to bottle test quantities of gas which may be used for commercial sale. Oil will be sold to a local refinery. Production testing will enable the operator to estimate the volumes of recoverable hydrocarbons from the Caldag pay zone and to assess the commerciality of the accumulation. Subject to successful production testing, the well will be suspended for near-term production.

Niche’s interest in Block 4077 comes by way of a series of convertible loans to Oman Resources Ltd which, at Niche’s option, or automatically on the occurrence of certain specified events, convert into a 26.7% interest in Oman Resources Ltd. Oman Resources Ltd is farming in to a 50% interest in Block 4077.

Following independent analysis, the operator has estimated that the central part of the 4077 Block contains 80 billion cubic feet (bcf) of recoverable gas in one development project. Two more exploration areas are present to the east and west, which are estimated to contain reserves of 330bcf with an upside of 750bcf of recoverable gas. The operator and Oman Resources intend to…

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