LONDON (Alliance News) - Caspian Sunrise PLC said production from shallow wells at its BNG asset in Kazakhstan declined in May as production from overworked wells fell particularly rapidly.
Shares in the oil and gas exploration firm were down 12% at 12.10 pence in morning trade.
May production from the shallow wells was 1,396 barrels of oil per day, down 5.1% from 1,471 barrels. Aggregate production dropped to 42,434 barrels in May from 44,115 barrels in April.
"Compared to April 2019, average daily production fell as the production from overworked wells declined at a faster rate than previously experienced," said Caspian.
May production figures from the shallow wells show, according to Caspian, that prioritising cash in order to fund the group has led to problems with production.
"Productive capacity of the better producing wells is declining at a rate faster than necessary, as periodic routine maintenance work has been deferred to allow cash to be generated," said Caspian.
"No significant workovers on these better producing wells have been conducted since they first came on stream in 2016 and 2017, and until we are able to do so we will continue to expect further declines in the daily rates of production," the company added.
Initial results from shallow well 808 have been unreliable and Caspian said its plans to re-perforate the well have now been delayed due to "operational reasons".
Caspian has also decided to remove a 30 metre section of liner and drill pipe at Deep Well A5, also at BNG. The cut will be made at a depth of 4,005 metres. The company will then begin a new 500 metre side-track from a depth of 4,035 metres.
Deep well A5 was drilled in 2013 to 4,432 metres but was blocked with drilling fluid and debris. Following this, a side-track was drilled and a 5-inch liner was run to the bottom of the well.
In late 2017, the well flowed for 15 days but was then restricted by a metal blockage which substantially reduced its flow rate. Caspian, although coming close to removing the remaining metal, has not been able to do so and is now planning a new side track.
However, given the previous drilling issues, the new side track will be drilled from below the salt layer at BNG. A contractor has been found, equipment is being sources, and side tracking is set to begin in the third quarter of the year.
Drilling at Deep Well A8 has reached 4,440 metres and the company plans to take another core sample to confirm the presence of oil.
Caspian Sunrise is still waiting on contractors and equipment for a high-pressure acid treatment at Deep Well 801, with work due to start in June and expected to take two months.
The well has been opened regularly to relieve pressure and oil and gas came to the surface with minimal water during the last opening. However, the limited amounts recovered confirmed significant quantities of obstructive, hardened, high-density drilling fluids in Deep Well 801.
The licence upgrade for the MJF structure at BNG has still not been obtained, despite being "very overdue". Caspian has been in contact with the regulatory agencies involved and is confident it will be able to sell oil at international prices in the third quarter of 2019.
Caspian Sunrise (CASP)