Max Petroleum Drilling Update May 2011
Max Petroleum Plc, an oil and gas exploration and development company focused on Kazakhstan, announced today an operational update of its activities in the Blocks A&E Licence area in the Republic of Kazakhstan.
Due to ongoing performance issues with the drilling rig and contractor combined with a poor and deteriorating condition of the uncased wellbore below 2000 metres, the Company has decided to complete the ASK-1 well as a Jurassic producer and drill a second well both to test the prospect’s Triassic potential and further appraise the Company’s previously announced Jurassic discovery.
The Company plans to begin drilling the ASK-2 well in July 2011 using the IDECO rig currently drilling the NARS-1 exploration well in the Narmundunak South prospect on Block E. The Company has terminated the drilling contract for the Sun ZJ-40 rig currently drilling ASK-1 and will release the rig immediately upon completion of drilling operations on the well. In addition, the Company has released the Sun ZJ-30 rig after it completed drilling operations on the ZMA-ET2 appraisal well in the Zhana Makat Field.
In addition to targeting the primary Triassic prospect, the ASK-2 well will test additional Jurassic reservoirs potentially trapped by the same sealing fault as the Jurassic reservoirs discovered in ASK-1, previously announced on 1 April 2011. The Company estimates that the productive reservoirs seen in ASK-1, contain between a range of 4 to 7 million barrels of oil in place with expected oil recovery factors ranging from 35 to 40%. The Company expects to place the ASK-1 well on test production in approximately 60-90 days upon receipt of the requisite government approvals.
Procurement of Additional Drilling Rig and Forward Post-Salt Drilling Programme
The Company has entered into a one-year contract with Zhanros Drilling LLP for a ZJ-20 capable of drilling to 2,000 metres (the “ZJ-20 rig”), which will be used in conjunction with the IDECO rig to drill post-salt exploration, appraisal and development wells going forward. The Company is currently mobilising the ZJ-20 rig to the Uytas Field in Block A to drill three appraisal wells beginning in June 2011, after which the rig will test the Zhalgyz South prospect also located in Block A.
Forward plans for the IDECO rig include finishing the NARS-1 exploration well, then drilling the BOR-3 development well in the Borkyldakty Field, the ASK-2 exploration and appraisal well in the Asanketken field, and the SAG-1 well in the Sagiz West prospect, all of which are in Block E.
James Jeffs, Executive Co-Chairman, commented: “While the decision to complete the ASK-1 well into the Jurassic and to test the Triassic in the next well was not an easy one to make, we believe it will benefit the Company and our shareholders by allowing us to get the Jurassic discovery on production and generating meaningful revenue and cashflow sooner than expected. We also believe using the IDECO rig to drill ASK-2 will be more efficient and cost-effective, given the issues we have been dealing with on the current well. Fortunately, the discovery in the Jurassic section is expected to generate significant future economic value and we look forward to assessing Asanketken’s Triassic potential in the next well.”