International Petroleum Quarterly Update and Review

Krasnoleninskiy Licence Area – Western Siberia, Russia

The Company, through its wholly-owned subsidiary IPL Siberia Ltd, owns a 75% equity interest in Souville Investments Ltd (“Souville”). Souville is the 100% legal and beneficial holder of Irtysh-Neft, a Russian company having exploration rights to four blocks in Western Siberia (“Krasnoleninskiy Project”). Assuryan Assets Ltd holds the remaining 25% interest in Souville and, by extension, the Krasnoleninskiy Project. The four blocks comprising the Krasnoleninskiy Project cover a total area of 1,467 km² and are located in the Khanty-Mansiysk Region in Western Siberia, the largest oil-producing region of Russia.

In late December 2010, a turn-key drilling contract with Pravdinskaya Expedition LLP was signed for the drilling of two wells, one on each of Blocks 7 and 8 of the Krasnoleninskiy Project. Preparation of winter access roads and well site construction commenced in January 2011, and mobilisation of drilling rigs and other service equipment followed on schedule.

During April 2011, the Company commenced drilling both Well No. 1 and Well No. 2 at Blocks 7 and 8 respectively using two separate drilling rigs. Well No. 1 and Well No. 2 had target depths of 2,850 metres and 2,930 metres respectively, to investigate formations ranging in age from Cretaceous down through the weathered crust of the Paleozoic. The final depths of 2,845 metres and 2,909 metres for Well No. 1 and Well No. 2 were reached by the end of May 2011 and oil was discovered in core from multiple intervals in both wells.

During June 2011, the Company completed its internal interpretation of the electrical logging results from Well No. 1 and Well No. 2 and the interpretation of the electrical logging performed on both wells indicated that the Bazhenov and Tyumen suites are oil-bearing.

The interpretation discounts sections that, although may be oil-bearing in the core, are not expected to contribute during production due to their low permeability.

The Company commenced an extensive testing programme in Well No. 1 during June 2011 and in Well No. 2 during July 2011. Production casing has been installed and cemented in both wells, and the Company is currently carrying out extensive testing of all zones.

The 1,467 km² area comprising the Company’s four licence blocks has been extensively surveyed by 2,446 line-kilometres of closely-spaced 2D seismic data, which identified more than thirty prospects, including five “superstructures”. Within these superstructures, there are a number of potential reservoirs, ranging in age from Paleozoic to Cretaceous, stacked upon each other, offering the potential of multiple producingzones in a single well. In a report to evaluate the hydrocarbon resource potential dated 12 May 2011, Ryder Scott Company-Canada, an independent oil and gas consultant (“Ryder Scott”), estimated the unrisked prospective (undiscovered recoverable) resources of the four blocks at 169 (Low Estimate), 260 (Best Estimate) and 385 (High Estimate) million barrels. Based on the undiscovered unrisked resource estimates and scoping type resource economic evaluation reports from Ryder Scott and the oil shows in Well No. 1 and Well No. 2, the Company believes that the Krasnoleninskiy Project has significant exploration potential.

The current approved work program requires the drilling of two wells on the Krasnoleninskiy blocks by 30 June 2012 and the drilling of two additional wells by 30 December 2012 (“Current Work Program”). The Company satisfied the first part of this requirement by drilling Wells No. 1 and No. 2 during 2011 and plans to satisfy the second part of the Current Work Program by drilling Wells No. 3 and No. 4 during the first half of 2012.

Alakol Licence Area – Republic of Kazakhstan

The Company, through its wholly owned subsidiary North Caspian Petroleum Ltd, operates and owns a 50% interest in subsoil use rights for the exploration of hydrocarbons in an early stage project in eastern Kazakhstan, bordering the western boundary of the People’s Republic of China (“Alakol Licence Area” or “Kazakhstan Project”). Remas Corporation LLP, a privately owned Kazakhstan company, holds the remaining 50% interest.

Based on an independent seismic interpretation that was completed early in 2011, incorporating the results from drilling three wells, the Company decided to focus on drilling for the thick Mesozoic sediments that were encountered in Well A-3, in areas away from the possible effects of metamorphism, where it is believed reservoir-quality formations could be present.

During June 2011, the Company commenced drilling at Well A-8 of its Kazakhstan Project. Well A-8 is the fourth well to be drilled in the licence area of the Kazakhstan Project and has a target depth of 2,000 metres and a budgeted cost of US$4million.

Artesian wells in the area are associated with oil seeps and films of oil, proving the Alakol Basin has generated hydrocarbons. Seismic data indicates that potential Jurassic and Triassic reservoirs are present as stratigraphic traps on the flanks of Paleozoic-age volcanic intrusions or basement highs.

In a report to evaluate the hydrocarbon resource potential dated 6 June 2011, Ryder Scott estimated the unrisked prospective (undiscovered recoverable) resources at 935 (Low Estimate), 1,379 (Best Estimate) and 1,980 (High Estimate) million barrels. Based on the undiscovered unrisked resource estimates
from Ryder Scott, the Company believes that the Kazakhstan Project has an exploration potential of 1.4 billion barrels (Best Estimate) and plans to drill one other exploration well, in addition to Well A-8, by the end of 2011.

Additionally, a 3D seismic program of up to 500 km² is planned, contingent on positive drill results from either of the first two wells in the new Mesozoic drilling program. The 3D seismic study (if completed) will allow for immediate movement towards an appraisal drilling program in 2012.

Source www.internationalpetroleum.com.au

Previous post

Victoria Oil and Gas Application for Share Listing

Next post

Polarcus 3D siesmic acquisition for the Bjarmeland Platform in the Barents Sea