Caspian Oil and Gas: December Activity and Q1 Plans
Perth-based exploration company Caspian Oil & Gas Limited is pleased to report its activities for the December 2011 Quarter.
Activities
– West Mailisu #2 produced a minor amount of oil (~20bbls) on test, indicating a tight and/or damaged reservoir
– Recorded 20km of 2D seismic over four leads in the East Mailisu and Charvak licences in November 2011
– Appointment of Mr Avraham Ben-Natan as a Non-Executive Director of the Company
March Quarter Plans
– Undertake workover of Mailisu III #6 to remove stuck perforation guns and production test the well
– Finalise interpretation of the 2011 East Mailisu and Charvak seismic acquisition
– Promote farm-out of Kyrgyz projects, subject to licence renewals
– Sale of Romanian oil interest
Kyrgyz Republic Projects
Background
Caspian Oil & Gas, through its subsidiaries, holds six exploration licences and two production licences in the Fergana Basin, giving it a significant exploration position in the Kyrgyz Republic in Central Asia.
Operations
The West Mailisu prospect in the Kyrgyz Republic lies adjacent to the Mailisu IV oil field in the Kyrgyz Republic. The West Mailisu #2 well, which Caspian spudded in June 2011, was pump tested in December. Some 10m³ of completion fluid and 3.2 m³ (~20bbls) of oil was recovered before the pump ran dry. Subsequent measurement of the fluid level in the hole confirmed that there was little further influx into the wellbore from the formation, indicating that the formation is either tight and/or damaged. When drilling Well #2, Bed III was encountered high to prognosis, while still using heavy mud designed to drill the top section of the well. This heavy mud could be expected to cause severe reservoir damage. The commercial potential of the reservoir can thus only be established by sidetracking, radial drilling or fracture stimulating (“fraccing”) to test beyond the potentially damaged zone. Given the cost of mobilising the required specialised equipment, the Company is assessing its options.
Work activity is now focussed on the completion and testing the previously drilled Mailisu III #6 well. This 1,501-metre well intercepted oil within the carbonates of beds V and VII. Drilled in November 2009, it has not been tested to date due to stuck perforation guns and restrictions on acid sales throughout 2010. An attempt will be made to remove the stuck perforation guns using a recently acquired fishing tool to enable the pump and tubing to be set at the optimum level. Well #6 will then be pump tested before attempting an acid treatment.
Caspian is still waiting for the renewal of its exploration licences, which is considered an essential prerequisite to farming out the Kyrgyz acreage. A change of Government following the 30 October presidential elections and restructuring of the Mines Ministry to the Agency of Geology and Subsoil Usage have delayed consideration of Caspian’s request.
