TAG Oil Ltd. has formally entered a petroleum services agreement with Badr Petroleum Co. (Bapetco) to begin development operations at the unconventional heavy oil Abu Roash "F" (ARF) reservoir in Badr oil field (BED-1), a 107 sq km (26,000 acres) concession in the Western Desert of Egypt.

TAG Oil was awarded the agreement in September after negotiations with Egyptian General Petroleum Corp. (EGPC) and a letter of intent confirming EGPC had commissioned Bapetco to conclude the petroleum services agreement with TAG Oil.

Badr oil field was discovered in 1982 by a joint venture of Shell Oil and EGPC (Bapetco). There has been production across the concession from conventional reservoirs of light oil and associated natural gas through primary development of Kharita, Bahariya, and certain Abu Roash sandstone formations. The ARF reservoir produced conventionally from some wells with considerable initial oil rates but has declined rapidly.

TAG Oil conducted analysis of the geologic, geophysical, and well production data of the target ARF zone, which is a deep, tight, low porosity, low permeability carbonate reservoir with varied fluid characteristics across BED-1, the company said in a September release. The company determined that there is a high probability for successful commercial development of the ARF reservoir by applying proven technologies including long-reach horizontal wells, hydraulic fracture stimulation, and potentially other enhanced oil recovery production techniques, it said.

The 10-year concession includes an optional 10-year extension. Multiphase development is planned (evaluation in phase one and commercial production in phases two and three).