Caspian Sunrise Regulatory News (CASP)

19 Dec 2008 10:30



Roxi Petroleum plc

Appraisal Drilling Success; Disposal of Munaily and Funding Update

Highlights

Two new oil wells on the Galaz Contact Area

NK Konus well NK3 encountered a total of 12m net oil pay in Arskum and Upper Jurassic sands

NK Konus well NK4 has encountered a total of 14m oil stained upper Jurassic sandstone

Oil quality of approximately 26o API

5 well programme to be completed by end 2008

Trial production expected 2009

5 further wells planned to explore deeper horizons in 2009

Potential reserves upgrade on NW Konus field after completion of current drilling programme

Disposal of Munaily for $1m, plus a potential further $2m production royalty, dependent on production volume

Rob Schoonbrood, Roxi CEO commented: 

"The discovery of oil at NW Konus signifies the beginning of the company's move to production and development from pure exploration. We look forward to upgrading our reserves levels once full testing has been completed

It can also be seen as a total justification of the company's change in strategy to farm-out our assets - thereby adding significant value through immediate drilling. 

Our initial farm outs, and the sale of Munaily, has assisted our short term funding. We are in negotiations regarding our longer term needs, and remain confident of securing a strategic source of funding for Roxi's long term development".

  Enquiries: 

New Oil Discovery at Galaz Contract Area (Roxi interest 30.09%)

Roxi Petroleum plc (AIM; RPX) is very pleased to announce drilling success on the NW Konus field in the Galaz Contract Area, in the Kyzylorda Oblast Western Kazakhstan. Well NK3 has encountered a highly commercial hydrocarbon interval in the primary Jurassic reservoir zone. Well NK4 has encountered oil shows in the same interval and is waiting further evaluation. These wells confirm the new geological model for the field and gives increased confidence for a reserves upgrade of the NW Konus field in the new year. The Company is on track to complete the drilling of all five wells (NK1,3,4,5,6) by the end of 2008, and will target getting the wells onto long term production in 2009.

The company currently has three rigs drilling on NW Konus field, as a result of the recent farm-out to KazRosMunai LLP.

Well NK3 reached a total depth of 1405m on the 4th December 2008 on the NW Konus field. The well encountered 10.4m of oil bearing upper Jurassic sands at a depth of 1306m Measured Depth (MD), with a 1.5m of net pay in the secondary target, the Lower Cretaceous Arskum Sands at a depth of 1287m MD. The Jurassic sands have been perforated and flowed oil to surface at a short term rate of 980 barrels of oil per day (bopd), during restricted clean-up flow with no choke. The well is currently being prepared for a 90 day test, with stabilised rates expected between 300 and 600 bopd. 

Well NK4 was spudded on the 17th November to test Upper Jurassic and Arskum sands on the same structure. The well reached a total depth of 1446 m on the 11th December 2008, after coring 14m of upper Jurassic sandstone with oils shows. The well is currently waiting on the wire-line log results before being prepared for completion and testing.

Well NK5 was spudded on 7th December to test upper Jurassic and Arskum sands on the same structure and is current drilling ahead at approximately 1000m depth.

Well NK6 was spudded on 11th December test Upper Jurassic and Arskum sands on the same structure and is currently setting casing at approximately 600m depth.

The drilling results so far confirm the new geological model for NW Konus, developed from the results of the 3D seismic survey earlier this year, and gives confidence the Company will undertake a reserves upgrade following the completion of the 2008 drilling programme. The reserves upgrade will allow the company to enter pilot production in 2009.

The Company intends to drill a further five wells to approximately 2500m in first half 2009 to test undrilled middle Jurassic sandstones which underlie the existing reservoirs.

Sale of Munaily

The Board is also pleased to announce the disposal of Roxi's interest in Munaily for a consideration of $1 million cash plus a further $2 million payable out of future Munaily production

Current financial position

The proceeds from the initial payment on the farm in at Ravninnoe, which was announced on 19 November together with the proceeds from the initial payment from the sale of Munaily have assisted in providing short term funding. Together with the recent farm-out of part of the Galaz asset, these deals have also reduced the burden of funding our assets.

The Board remains in discussions to secure longer terms funding with a number of parties and will make an announcement in this regard in due course. The Board is also in advanced discussions with respect to securing additional funding via further farms-ins on its other assets.

Qualified Person 

Duncan McDougall, Technical Director of Roxi Petroleum and a Fellow in the Geological Society, London, has reviewed and approved the technical disclosure in this announcement. He holds a BSc in Geology and has 25 years international experience of exploration, appraisal, and development of oilfields in a variety of environments.