MXP.L Regulatory News (MXP)

20 Apr 2006 09:00

Max Petroleum PLC20 April 2006 MAX PETROLEUM PLC (AIM:MXP) OPERATIONS UPDATE Max Petroleum Plc ("Max Petroleum" or "the Company"), an oil and gas explorationand development company with an initial focus on Kazakhstan, today announces theconclusions of a review of a drilling proposal prepared for Max Petroleum byMcDaniel & Associates, an independent reservoir evaluation consultancy, and thesigning of a rig contract in Kazakhstan. McDaniel & Associates Review McDaniel & Associates reviewed a drilling proposal prepared by Max Petroleum'stechnical staff for East Alibek, one of Max Petroleum's four assets in WesternKazakhstan. The objective of this review was to confirm that the proposedlocation of an exploration well on the East Alibek Licence was in an optimumlocation based on the available data and to comment on the reasonableness of therange of crude oil volumes estimated by Max Petroleum to be potentiallyrecoverable from the Licence. The mean oil in place is estimated by Max Petroleum to be 17.5 million barrels(MMbbls) risked and 67.4 MMbbls unrisked. The Max Petroleum report follows theacquisition of 11 new 2D seismic lines over a portion of the East Alibek Licenceand preparation of a new structural interpretation of the Carboniferous KT-1 andKT-2 zones in the Licence. In addition, a detailed log interpretation of theexisting G-4 exploration well was prepared. The full range of volumes estimatedby the Company can be found in the Appendix below. A summary of the conclusions of the McDaniel & Associates review are as follows: 1. There is sufficient data available to justify the drilling of anexploration well at this time and the proposed location appears to be in theoptimum location of the field. 2. McDaniel & Associates conducted a Monte Carlo analysis of thepotentially recoverable crude oil volumes and estimated a risked meanrecoverable volume of 11.2 MMbbls, well within the range of recoverable volumes. 3. The potentially recoverable crude oil volumes have a high degree ofuncertainty which is very typical of most exploration wells. Rig Contract Signed The Company has signed a rig contract for three firm wells with Nabors DrillingInternational Ltd, using Rig 40, a 2000 hp rig equipped with a 1200 hp top drivecapable of drilling to depths in excess of 5500 metres. The rig is expected tocommence operations on the East Alibek licence area during the fourth quarter of2006, following the completion of its current firm contractual obligations.Subsequent to the drilling of the East Alibek-1 well, the Company expects tomove the rig to a location in Blocks A&E, targeting the first prospective deepstructure in that acreage during the Spring of 2007. The Company then expectsto move the rig on to the first deep well in the Astrakhanskiy Block. Enquiries: Max Petroleum PLC Steve Kappelle T: +44 (0)20 7355 9590 Chief Executive Officer 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 APPENDIX The Max Petroleum report estimated the following range of potentiallyrecoverable crude oil volumes based on a Monte Carlo probabilistic analysis asfollows: Source Unrisked Unrisked Unrisked Unrisked Risked Mean P90 P50 P10 MeanKT-1 Zone Original Oil In Place, 5.0 78.4 283.3MMbbls Recoverable Oil, MMbbls 0.8 14.1 48.4 20.2 5.2 KT-2 Zone Original Oil In Place, 11.2 169.7 477.5MMbbls Recoverable Oil, MMbbls 2.3 35.7 108.3 47.2 12.2 Total KT-1 and KT-2 Zones Original Oil In Place, 16.2 248.1 760.8MMbbls Recoverable Oil, MMbbls 3.1 49.8 156.7 67.4 17.5 The geological chance of success was estimated by Max Petroleum to be 26percent. Information in this announcement relating to the potentially recoverable crudevolumes is based on data compiled by McDaniel & Associates, who are independentconsultants to the Company. McDaniel & Associates have sufficient experiencewhich is relevant to the activity they have undertaken that has been conductedaccording to SPE standards and consent to the inclusion of the data in the formand context in which it appears in this announcement. This information is provided by RNS The company news service from the London Stock Exchange