Chernetska

The Chernetska project is located approximately 300km north east of Kiev in the Talalayvskiy district of the Chernigiv region of Ukraine, about 2km to the southeast of the village of Chernetska.

The area has a developed gas transportation infrastructure. A network of pipelines that are part of the United Energy System of Ukraine pass through the license area. The license is an exploration license which includes the rights for pilot production (on a commercial basis) prior to obtaining a production license. The license terms are that reprocessing of the seismic data studies are to be undertaken and one well is to be drilled within the license area.

The Chernetska project license 2982 (100 per cent owned) area size is 104.6km2 within areas B21/22, B24/25, B20. The Chernetska gas-condensate project is located in the northwestern part of the Dnieper-Donets Basin in the Glynsko-Solokhyvske oil and gas bearing sub-basin.

The Chernetska field contains three hydrocarbon bearing horizons (B20, B21/22 and B24/25) in the Visean sandstones and limestones of the Lower Carboniferous. Well Slob-321 intersected oil in the B20 horizon near the oil-water contact. Recent seismic studies have shown a three way up dip fault bounded reservoir that is expected to contain up to 4.8mbbls of oil.

Chernetska-1 was spud on May 6 2011. It is the first Hawkley well to be drilled on the Company’s Chernetska Licence area. Dry-hole cost for material and services is budgeted at US$8 million and cost to date is US$5.5 million.

Last month, the well drilled through an interval known to contain Bishophite, a magnesium chloride salt that can cause serious drilling problems and has caused many wells in the area to be abandoned. Hawkley took measures to mitigate the risk and the section was drilled without event.

The forward programme is to drill to the primary target of the B20 reservoir, which is expected at 4,360m drilled depth. Hawkley reviewed the progress of the well with the contractor and decided to install a downhole motor for the next section of the hole in order to improve the rate of penetration.

Chernetska

Sorochynska