LONDON (Alliance News) - Roxi Petroleum PLC shares fell on Thursday after the company said two of its wells at the BNG asset in Kazakhstan are being negatively impacted by blockages, making it difficult for the company to complete a thorough unimpeded test.
Roxi shares were trading down 7.6% to 6.70 pence per share on Thursday morning.
The company is currently drilling a series of deep and shallow wells on its flagship asset, but it is struggling to complete a flow test on its two latest deep wells because drilling fluid is blocking the oil flowing to surface.
The deep well A5 was drilled to a depth of 4,442 metres but some of the drilling fluids injected during the process were not recovered, blocking the oil every two hours or so when the company attempts to flow test the well.
Despite the blockages, the well has flowed at an average rate of 2,000 barrels of oil per day for two hours at a time, but the company has not yet completed a longer test because the drilling fluids become set in the oil pipe, blocking oil which eventually builds up pressure to clear the blockage by itself.
Significantly, the well produces oil for those two hours but Roxi said it takes on average five days for the oil to build up enough pressure to clear the blockage.
Production from the well is expected to increase as more drilling fluid is removed from the well, but Roxi could be in for a long wait as it said the amount of fluid in the well is "finite", meaning the oil doesn't look likely to flow naturally for some time.
"This problem is the result of the extremely high pressure encountered in drilling the well and the associated requirement to use extremely dense drilling fluids to control that pressure," said the company.
In another blow, the deep well 801 has suffered a similar problem that requires Roxi to take action before it can conduct a proper flow test.
The company intersected and perforated three intervals whilst drilling the 801 well, with all of them flowing oil. However, the well is also being blocked by unrecovered drilling fluids meaning the company can't conduct an unimpeded flow test.
Roxi did not provide any figures or comment on the oil the well has flowed intermittently.
Unlike the A5 well where the company must sit and wait for the blockages to clear, Roxi said it will conduct a prolonged wash using less dense mud injectged under pressure at the 801 well, which will lessen the density of the drilling fluids to make it easier for that fluid to be recovered.
That work has already begun, but Roxi did not provide any guidance about when it would be finished.
On a slightly more positive note, the deep well A6 at BNG has been drilled 1,350 metres without any incidents. Drilling began in November and Roxi aims to drill the well to a total of 5,000 metres before the end of February 2016.
Lastly, Roxi has also tested a third interval at the shallow well 143 where it has "detected" oil. The test on the third interval builds on the two intervals found when the well was originally drilled back in April 2013.
The oil in the latest interval is considered to be of "high quality" with a density of 39 degrees API. The 143 well is producing a rate of 100 barrels of oil per day under test conditions, of which 59 barrels are net to Roxi.
Roxi said its shallow wells at BNG have not been affected by any blockages, and the four shallow wells at BNG, including 143, that are currently being tested are producing at a combined rate of 280.0 barrels of oil per day, of which 165 barrels is net to Roxi.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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