The Race for Oil and Gas Resources are on in Ukraine - Western Companies Enters the Exploration and Production Arena Right Now !

Shelton Canada Corp. is a junior oil and gas company actively engaged in exploration and development activities in Ukraine. The company's most significant project, West Biruchya , is an offshore project in the Sea of Azov.

Shelton Canada and Ukraine's largest oil and gas company, Ukrnafta, will drill their second development well as partners in the Kashtan Petroleum Joint Venture. Located in the Lelyaki oil field in east-central Ukraine, the well No.307 is expected to spud in the second quarter of 2008. The new well has a projected total depth of 1960 metres and will be drilled as a directional well to further develop the P1&2 and K-1 productive reservoirs. Recently-drilled offset wells showed initial productivity of greater than 240 barrels of light oil (42 degree API) per day (net 108 barrels). Net drilling cost is expected to be $450,000 Cdn and the well is in close proximity to pipeline infrastructure for rapid tie-in.
"This second well is an ongoing part of the Kashtan Joint Venture's plan to fully exploit the remaining oil reserves in the Lelyaki field through optimal placement of infill production wells," said Zenon Potoczny, President and CEO of Shelton Canada. "In addition, the Joint Venture anticipates re-entering and sidetrack drilling of four other suspended wells in different parts of the field during 2008. These well interventions show very good economics as the capital cost is much lower than new drilling. We have been very happy with the pool performance since it was acquired in mid 2007 and the first well (No.304) drilled post acquisition has averaged 185 barrels of oil (net 83 barrels) since coming on-stream in December 2007. Shelton's average daily production for 2007 was net 255 barrels per day. The Joint Venture sells its production at Brent equivalent pricing."
The strategic partnerships with leading Ukrainian oil and gas companies like Ukrnafta and Chernomorneftegas are a key reason for Shelton Canada’s success in Ukraine. Current net production of Shelton Canada is 350 barrels per day with further increases expected in 2008.

On October 19, 2007 , Vanco Signs Ukraine’s First Deepwater Black Sea Agreement for the Prykerchenska Production Sharing Agreement (PSA).
The signing of the Production Sharing Agreement gives Vanco the opportunity to explore and develop the highly prospective Prykerchenska Block. Work will begin immediately on a detailed exploration program which will include an extensive 3D seismic survey in 2008 followed by deepwater drilling.

The PSA acreage is located to the southeast of the Crimean Peninsula, the Prykerchenska block covers around 12.900 km2 or about one-third of Ukraine’s deepwater area with water depths ranging from 500 meters to over 2,000 meters. Exploration will concentrate on the Tetyaev High, in water depths greater than 2,000 meters where Vanco has identified a series of large structures, and on the shallower Sudak Folded Belt where Vanco has identified numerous attractive prospects. Some prospectivity is also identified in the deeper Andrusov High area.
Prykerchenska license area contains around 32 leads and prospects where 7 are in syn-rift sediments and rest (25) are in the Sudak trend.
The PSA has a 30 year term and will allow Vanco to start exploration and eventually build production facilities.
For the Ukraine, this is one method of solving Ukraine’s energy needs and it could help the country fulfill its goal of producing 25 percent more gas within the next 20 years.

If exploration efforts are successful, the development of the project will require investments of more than $20 billion.
The Kremlin in the past has unexpectedly doubled the price Ukraine pays for gas at the border in 2006 and then raised it again by a third in 2007. The Kremlin seems intent on making it's former member states pay more for their energy needs.

On June 5, 2007, Marathon International Petroleum, a wholly-owned subsidiary of Marathon Oil, and National Joint Stock Company Naftogaz Ukrainy (NAK) signed a cooperation agreement to carry out technical studies that could lead to the joint exploration for, and production of, hydrocarbons in an area of interest in the Dnieper-Donets Basin located in North Central Ukraine. According to the agreement, NAK and Marathon will embark on a joint study of an agreed area of joint interest, covering approximately 26,000 square kilometers. The study will be conducted over three years during which time decisions will be made concerning further activities the Companies may undertake.
This basin supplies Ukraine with 80 percent of its hydrocarbons and is believed to contain natural gas deposits deep below those being exploited.
The Dnieper-Donets Basin is believed to contain significant remaining undiscovered resources of crude oil and natural gas. However, the recovery of these undiscovered resources is subject to considerable subsurface challenges and is dependent on the application of unique technologies.

On the 7th of December 2006 Capital Oil signed an exclusive Joint Activity Agreement (JAA) with the Ukrainian state and Oblast owned company Bohorodchanynaftogaz (BNG). This agreement outlines that Capital Oil will have the operative responsibility for BNG in the exploration of oil and gas in the two licence blocks that is owned by BNG.

Capital Oil is at the moment test producing the first of 2 successful exploration wells in the two licenses called Kubash-Lukva and Maydan, outside Ivano-Frankivsk in the western Ukraine.