Max Petroleum: Uytas Field Well Test Positive

Max Petroleum Plc, an oil and gas exploration and production company focused on Kazakhstan, is pleased to announce an update on production test results and development plans for its Uytas Field.

Highlights include:

 Interpretation of 3D seismic data acquired in late 2011 has revealed a structure larger than previously identified;
 Company estimates overall oil in place of 184 million barrels (“mmbo”), including:
o 58 mmbo in conventional Cretaceous Aptian (“Aptian”) and Jurassic reservoirs;
o 126 mmbo in shallower, non-conventional Cretaceous Albian (“Albian”) reservoirs;
 Well tests have confirmed commercial productivity from the Aptian and Jurassic sandstone reservoirs with Phase One of an appraisal and development programme expected to include approximately 30 low-cost, shallow vertical wells;
 Based on testing and core analysis, the Company is planning an enhanced oil recovery pilot project using steam injection to determine the commerciality of the Albian reservoirs.

Conventional Production

The Aptian Formation is generally present in the field as sandstone reservoirs from two to eight metres thick at depths ranging from 110 to 165 metres. The Company initially produced oil from this formation in the UTS-1 discovery well in January 2011. Recent extended production tests from the UTS-2 well have confirmed the commerciality of the
formation. From perforations at depths between 132 to 136 metres and 144 to 148 metres, the UTS-2 well has produced 26 degree gravity oil with no water at an average rate of 45 barrels of oil per day (“bopd”) for two months with no decline. Similar reservoirs are also present in the UTS-4 well, but have not yet been tested. The sandstone reservoirs in the Aptian Formation are of excellent quality with up to 37% porosity. Based on the production tests in the UTS-1 and UTS-2 wells, cores taken in the UTS-2 and UTS-4 wells, and the new 3D seismic data, the Company estimates oil in place of 42 mmbo in the Aptian Formation. The Company currently estimates the oil recovery factor will be about 20%, but additional drilling and testing will be needed before the recovery factor can be confirmed.

The Jurassic Formation produced 27 degree gravity oil in the UTS-1 well (as previously reported in January 2011). Testing of Jurassic reservoirs in the UTS-3 well began recently with perforations from 428 to 432 metres in depth, producing at an initial indicative rate of 47 bopd. The Company currently estimates overall oil in place of 16 mmbo in the Jurassic reservoirs, with potential recoveries of approximately 20%.

The Albian Formation, present across the field at depths ranging from 40 to 100 metres, was extensively cored in the UTS-2 and UTS-4 wells. Analysis of these cores confirms up to 67% oil saturation in sandstone reservoirs, but initial production tests in the UTS-1 and UTS-4 wells have only produced water, suggesting the oil is too viscous to flow into the wellbore under natural conditions. Further testing of the UTS-4 well, involving injecting light oil into the reservoir as a solvent, resulted in production of new oil from the reservoir. The results of the new seismic mapping, combined with the new core and logging data from the UTS-2 and UTS-4 wells was used to generate an estimate of 126 mmbo of oil in place in the Albian Formation. This oil does not appear to be recoverable using conventional production techniques, but an ongoing study is being conducted by a Houston-based reservoir consulting firm to identify appropriate enhanced oil recovery techniques and advise on further testing and design, including a steam injection pilot project.

Production Plans

On the basis of the recent test results, the Company is preparing a Phase One development plan for Uytas to drill approximately 30 additional shallow (180 to 500 metre depth) wells to appraise and produce the conventional reservoirs in the Aptian and the Jurassic. Drilling is expected to commence in late 2012 and be completed over a period of about 12 months. The majority of these wells will target the Aptian, but four will specifically target the Jurassic

In addition, an enhanced oil recovery pilot project for the shallower Albian reservoirs, involving steam injection and oil recovery from three to five shallow wells (less than 100 metres) is being planned.

3D Seismic Data

The new 3D data set over the Uytas field is of excellent quality, identifying a four-way anticlinal structure at the top of the Jurassic Formation that is slightly larger than previously mapped. The data suggests there are relatively few faults, which will make development of the field more straightforward.

Reserves report

The Company’s Competent Person, Ryder Scott & Company, LLP, is preparing an independent report on the Uytas Field as part of the Company’s reserves report for the fiscal year ended 31 March 2012.

Michael B. Young, President and CFO, commented:

“The results from the first four wells, including extensive cores, and the new 3D seismic survey, have confirmed that the field is larger than we had originally thought and is well suited for development across its large structure with limited faulting. Most importantly, we have confirmed a significant conventional discovery in both the Cretaceous and Jurassic sections that can add meaningful short-term production and cash flow.”

“The value of Uytas will be enhanced further if we are able to confirm the commerciality of the shallower Albian reservoirs. The initial results of injection tests are encouraging and we look forward to getting a pilot project in place to confirm the upside potential of the nonconventional resources in the field.”


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