Caspian Sunrise Regulatory News (CASP)

Roxi Petroleum PLC

("Roxi" or the "Company")

Update on Operations at BNG

Roxi, the Central Asian oil and gas company with a focus on Kazakhstan, is pleased to further update the market with news of progress at its flagship BNG asset.

Deep Well A5

The well was spudded in July 2013 and drilled to a total depth of 4,442 meters with casing set to a depth of 4,077 meters to allow open hole testing. Core sampling revealed the existence of a gross oil -bearing interval of at least 105 meters from 4,332 meters to at least 4,437 meters.

As previously reported the well was difficult to drill with a salt layer of approximately 130 meters and high temperatures and pressures at the lower depths. This required the extensive use of heavy drilling fluids to control the pressures in the well during drilling. Additionally equipment became stuck in the well with a stuck pipe at the bottom.

In July 2015 the board decided the best way forward was to side track the well from a depth of 4,000 meters with the intention of running casing and drill pipe the full length of the side-tracked well to allow conventional testing.

The first side-track was successfully drilled to 4,400 meters but subsequently encountered similar problems to the original well caused by the excess drilling fluids, becoming stuck at a depth of 4,400 meters. However, following a smaller second side-track, the drilling stopped in the gross oil bearing zone. The prospective oil zone at A5 is therefore now set to be tested on an open-hole basis.

To clear the remaining drilling fluids the well has been alternately opened and closed with both oil and drilling fluids flowing to the surface. Management remain pleased with the potential of the well and look forward, once the drilling fluids have been removed, to a period of uninterrupted testing to determine flow rates.

Deep Well 801 

Deep Well 801 was spudded on 15 December 2014 with a planned Total Depth of 4,950 meters. The well is located approximately 8 kilometers from Deep Well A5 and was planned to target the same structure as Deep Well A5 in the Middle and Lower Carboniferous. The well was drilled by Sinopec, the Chinese multinational, at a fixed cost of $11 million. 

As previously reported core samples and logging have revealed a potentially oil bearing interval starting from 4,536 meters and extending 100 meters. The pressure and temperatures encountered indicate this well is unlikely to be connected to the reservoir targeted by Deep Well A5. Therefore should Deep Well 801 prove commercially viable it would be a separate discovery to the potential discovery previously announced in connection with Deep Well A5. 

The well has been drilled to a total depth of 5,050 meters and five potential levels for production have been identified below the salt layer. Since the previous update the deepest two of these levels have been perforated (from 4,896 - 4,910 meters and from 4,822 to 4,842 meters) although the excess drilling fluid in the intervals perforated has resulted in a new blockage. 

Oil tubing to a depth of 4,752 (above the stuck level) has been removed and an interval between 4,704 and 4,726 meters of the casing has been perforated to assess oil flows. Once the outcome of this 20 meter perforation test has been determined work to clear the excess drilling fluids and unblock the well will resume.

New Deep Well A6

Roxi expects to spud Deep Well A6 in the next few days. The new deep well is located some 1,200 meters from Deep Well A5 with a planned depth of 5,000 meters targeting pre-salt intervals in the Cretaceous, and is expected to take 4 months to reach planned total depth.

The well is being drilled for a fixed cost of $8.5 million, using the same rig and contractor as drilled Deep Well A5.

Further Deep Wells

Roxi plans to drill a minimum of a further two deep wells in the next 12 months. The timing and location of further deep wells is dependent on the findings from existing Deep Wells A5 and 801.

Current production 

Aggregate production from shallow wells 54, 805, 806, 807 and 143 is some currently approximately 350 bopd (207 bopd net to Roxi). Additionally Munaily continues to produce at the rate of 90 bopd (53 bopd net to Roxi). 

Under the terms of the BNG licence all production is sold a domestic price, which is currently $10 per barrel. 

Comment: 

Clive Carver, Chairman said 

The excess drilling fluids used during the drilling of both Deep Wells A5 and 801 are taking longer to remove than expected. It will only be once they are cleared away that meaningful unrestricted flow tests can be conducted.

Enquiries: 

Roxi Petroleum PLC

Clive Carver, Chairman +7 727 375 0202 

WH Ireland Ltd

James Joyce / James Bavister +44 (0) 207 220 1666 

Qualified Person 

Mr. Nurlybek Ospanov, Roxi's senior geologist who is a member of the Society of Petroleum Engineers ("SPE"), has reviewed and approved the technical disclosures in this announcement.