Slovakia’s Resources Development History:

Oil was originally discovered in the Western Carpathian in 1869 and in southern Slovakia in 1914. Prior to 1940, small shallow sources were exploited near urban centres. During the Soviet era token drilling and seismic was completed; wells were shallow and drilling was focused in the northern Danube Basin were prospective targets were near surface; a number of small gas fields were discovered. The remainder of the Danube Basin was mainly targeted for geothermal energy; during this drilling numerous shows of condensate, oil and methane gas were noted, but never pursued. Beginning in 1989, Maxus Energy became a partner with the Slovak National Oil Company ("SNOC"), reprocessed old seismic, completed new seismic and immediately identified drillable targets. Maxus was the target of a hostile take-over bid by a company having no interest in Slovakia and SNOC was unable to raise funds to pursue drilling. A review by a second company confirmed these potential drill locations. Eventually, SNOC was forced to divest itself of the Danube Basin permits.
In the Western Carpathian, little drilling was completed and only token seismic was completed during the Soviet era. Prior to this, numerous oil seeps were noted and developed. One well was recently drilled to follow-up the seeps, but it was completed with drilling technology that did not allow drilling to targeted depths or proper testing of hydrocarbons encountered. Another well focused on obtaining mineralization water for a spa encountered gas and oil at shallow depths (beginning at 383 m depth).
Following a thorough review of government reports and advice from local authorities Wharf Resources began acquiring permits that covered the most prospective areas of the Western Carpathians in 2005; later focusing on areas with highest prospectivity at moderate depths.
Slovakia has rapidly advanced its legal and policy framework since the late 1990s to allow it to enter the European Union in May of 2004. In Slovakia there is clear ownership of resource rights and hydrocarbons can be sold at world prices. The fiscal regime is favourable to resource development the acquisition of hydrocarbon permits follows the procedure for acquiring metal permits). Exploration permits are issued for 4 years with extensions allowed for a further 6 years. Permit taxes are 3,000 Sk./km2/year (presently £1 GB equals 56 Sk.) for the first four years and a minimal amount of work requires completion during the first two years. The owner of an exploration permit then has priority to exploitation licenses, which are taxed at 5,000 Sk./km2/year. Slovakia applies a 5 percent royalty to hydrocarbon extraction and has a flat income and value added taxes of 19 percent. A well educated and trained work force is available with a reasonable salary grid.