MXP.L Regulatory News (MXP)

20 Nov 2006 07:02

Max Petroleum PLC20 November 2006 Max Petroleum Plc ("Max Petroleum" or "the Company") Operational Update Max Petroleum Plc, an oil and gas exploration and production company operatingin Kazakhstan, today announced that it has drilled and completed its third andfourth wells in its Zhana Makat A discovery on Block E. The Company's third well in Zhana Makat A, the ZMA-4X, was completed in lateOctober 2006. This delineation well tested the field limits and confirmed theexpected oil-water contact. Separate drill stem tests were performed over threezones in the well to gain more information on possible additional productivezones in Zhana Makat and to comply with local requirements. The upper two zonesproduced marginal quantities of crude oil. The third zone was perforated closeto the oil-water contact for data acquisition purposes. It initially producedoil at a commercial rate before experiencing an increase in water production.The well was temporarily shut-in and has now been brought back online producingmarginal quantities of oil. The Company is considering whether to addperforations to enhance the production from the well or to convert it into awater injection well. Regardless, the results of the well have improved theCompany's technical understanding of the reservoir and will enable it tooptimize future drilling locations in Zhana Makat A. The Company completed its fourth well, the ZMA-3X, on 10 November 2006,perforating a total of 15.7 metres in the Jurassic formation at depths rangingfrom 797 to 830 metres. The well was drilled close to the crest of thestructure, and the log results are encouraging. The well began producing at anequivalent daily rate in excess of 400 barrels of oil per day ("bopd") and iscurrently being evaluated to determine its optimal productive capacity. The Company has moved the drilling rig to the ZMA-5X location to test the northeastern portion of Zhana Makat A and has commenced drilling. Subsequently, it isanticipated that the rig will move to Zhana Makat E to drill the ZME-1Xexploration well, the first of up to four wells the Company intends to drill onthat location. Daily production from the Zhana Makat A discovery is now in excess of 600 bopdand is expected to increase as the ZMA-3X is brought onto full production. As aresult of the extensive well testing carried out to acquire reservoirperformance data and satisfy government requirements, the Company now expects todrill a total of seven shallow wells by the end of December 2006. While this isfewer than originally anticipated, the Company still expects to drill a total of30 shallow wells by the end of 2007. Consequently, while the expected aggregateexit production rate for year-end 2006 is lower than previously anticipated, theCompany's work program should enable it to achieve a per well exit rate of 250bopd, in line with the Company's original expectation for each productiveshallow well. CPR Update The original Competent Persons Report ("CPR") was completed in October 2005,using a limited database of Soviet geophysical and well data. Since then theCompany has recorded and processed approximately 2,170 km of new 2D seismiclines and 380 km2 of 3D seismic, reprocessed a significant portion of oldseismic data, and acquired and reinterpreted several existing well logs. As aresult, the Company has commissioned a comprehensive review of its entire assetbase from McDaniel & Associates to update the original CPR, as well as toprovide an independent reserve valuation of the Zhana Makat structure. TheCompany expects the results of the updated CPR will be released in early January2007. Jim Jeffs, Executive Chairman, commented: "As Max Petroleum continues to execute on its shallow drilling programme, weare gathering information that is helping us to optimize the future drilling anddevelopment of Zhana Makat. The preliminary results of ZMA-3X are promising,representing the highest start up production rate of the wells drilled to dateand strengthening our belief that Zhana Makat is a very good developmentprospect in its own right. As we continue our thorough review of the technicaldata, firming up shallow, intermediate and deep prospects, we continue to beencouraged by the growth potential of our assets. The planned drilling programmethrough the end of 2007 will provide many opportunities to prove up asignificant portion of this prospectivity, and is simultaneously designed toprovide the operating cashflow necessary to sustain Max Petroleum in the longterm." 20 November 2006 Enquiries: Max Petroleum PLC Michael B. Young T: +44 (0)20 7355 9590 Chief Financial Officer Peter Moss T: +44 (0)7834 572837 Investor Relations Manager Pelham Public Relations Charles Vivian T: +44 (0)20 7743 6672 E : Charles.vivian@pelhampr.com Alisdair Haythornthwaite T: +44 (0)20 7743 6676 E: alisdair.haythornthwaite@pelhampr.com Alexandra Boyd-Carpenter T: +44 (0)20 7743 6361 E: a.boyd-carpenter@pelhampr.com WH Ireland Ltd Paul Dudley T : +44 (0) 20 7220 1666 E : paul.dudley@wh-ireland.co.uk James Joyce T : +44 (0) 20 7220 1666 E : james.joyce@wh-ireland.co.uk Henrik Busk, Petroleum Engineering and Geology Manager of Max Petroleum, aPetroleum Geologist, is the qualified person that has reviewed and approved thetechnical information contained in this announcement.END This information is provided by RNS The company news service from the London Stock Exchange