Matra, an independent oil and gas exploration and production Company with operations in Russia, announces an update on its operations and plans in the Sokolovskoe Field, Russia.
Well-12 has suffered from a build-up of wax in the tubing and an increase in water cut to 70% and has ceased to flow and has now been shut-in.
Prior to the increase in water cut and shut-in of the well, the Company had sought an independent review of the status of well-12. This review, which was conducted by Gaffney, Cline & Associates ("GCA"), concluded that, although there was insufficient data available to definitively determine the source of the water, the available data was not typical of an aquifer influx and that the water may be flowing behind the production liner from overlying formations. The GCA review recommended acquisition of further data in order to identify the source of the water before attempting a remedial work-over.
Following the GCA review, the directors have sourced a work-over rig (expected to be on site on 17 August) that will allow the Company to pull and clean the production tubing and then to artificially place the well into temporary production, using nitrogen. This will also allow production logging over the entire liner interval and into the production casing and will provide the best opportunity to identify the source of the water production.
Following production logging, a pressure survey will be conducted before deciding on the viability of further remedial work on the well.
After establishing water-free oil production, the leased production equipment at the site was demobilised and the well shut-in. Analysis of the production and pressure data shows that the well should be expected to produce at around 100 bopd with the installation of an electrical submersible pump and surface production facilities at the site. A firm decision to install this equipment has not yet been made but the directors expect that its installation will enable well-13 to generate a positive cash flow after the deduction of production taxes and other costs. The directors have taken the decision to await the results of the well-12 work-over before committing to this expenditure.
Evaluation of the Sokolovskoe Field requires two further elements before proceeding with a full field development:
· Delineation of the full extent of the Sokolovskoe structure by means of a full field 3D seismic survey; and
· The establishment of commercial production over an extended period and the confirmation of the geological model by the drilling of well-14.
Recent changes by the Russian authorities to the drilling approval process require the Company to complete additional environmental and ecological surveys and studies prior to approval of new wells. These studies have commenced and approval for well-14 is expected later this year.
The cost of acquiring the 3D survey would be approximately $2 million and the cost of well-14 is estimated at $5 million. These costs are subject to change due to variations in exchange rates and local market conditions. Additional funding would be required before the Company could commit to such a work programme.
The Company will continue to update the market as required.
Managing Director, Peter Hind commented:
"The continuing problems at well-12 are frustrating. We are, however, continuing efforts to obtain further information from the well and to see if we can continue production. Importantly, given that the well is low on the mapped structure, it is not key to the overall development of the field.
The Aphonenski reservoir has been produced over the longer term in nearby fields and the prognosis for well-14 remains good."
bpd - barrels per day
bopd - barrels of oil per day
Competent Person's Statement
The information in this release that relates to technical matters has been reviewed by Dr Neil Hodgson (BSc, PhD) Matra's Exploration Director, a Petroleum Geologist with 25- years experience and who is a Fellow of the Geological Society and a member of the Petroleum Exploration Society of Great Britain (PESGB).
For further information, please contact:
Matra Petroleum plcwww.matrapetroleum.com
Peter Hind, Managing Director Tel: +44 (0) 7990 807855
Neil Hodgson, Exploration Director Tel: +44 (0) 7973 342822
Matrix Corporate Capital LLP Tel: +44 (0) 20 3206 7000
Pelham Bell Pottinger Tel: +44 (0) 20 7861 3169
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