VGAS.L Regulatory News (VGAS)

7 Feb 2008 07:00

Volga Gas PLC07 February 2008 07 February, 2008 VOLGA GAS PLC Drilling Update- Vostochny-Makarovskoye #1 ("VM#1") Volga Gas Plc (the "Company"), is pleased to provide an update on well VM#1 onthe Vostochny-Makarovskoye license area. Highlights •More than 100m of gross pay in the Evlano-Livenskiy horizon, with drilling, coring and testing continuing •Commerciality confirmed on Bobrikovsky (Bo) and Evlano-Livenskiy (Ev-lv) horizons VM#1 was spudded on 30 September targeting the Bobrikovsky sandstone andEvlano-Livensky carbonate formations. The Bobrikovsky horizon was successfullytested in December 2007 and drilling continued to the Evlano-Livensky horizon. The original discovery well drilled in 1989-90, by LUKoil-Nizhnevolzhskneftencountered a 47m gross pay zone with gas down to 2,322m (TVD MSL) in theEvlano-Livenskiy horizon. The gas-water contact was not established. To date VM#1, having reached a true vertical depth of 2,402m has encountered inexcess of 100m of gross pay zone; confirmed by core data and open-hole testing.Drilling, testing and coring operations on the Evlano-Livensky horizon arecontinuing until the gas-water contact is reached. Drill stem testing in both the Bobrikovsky and Evlano-Livensky horizonsconfirmed commercial production rates. As a result of the extended drilling, operations on the well are expected tocontinue for several more weeks. However, the Company still expects firstproduction from this field by the end of 2008. A detailed update will follow thewell completion and upgraded reserve estimates according to both Russian and SPEclassifications will be released this year. Mikhail Ivanov, Chief Executive of Volga Gas commented: We are delighted with the results of drilling on the Evlano-Livenskiy horizon.Even before encountering the gas-water contact, these have significantlyexceeded our expectations. Whilst drilling and coring is taking longer than wepreviously planned, for excellent reasons, I am confident that we will put thefield on production by the end of the year as previously planned. - Ends - Volga Gas is an independent gas exploration and production company, whichcurrently holds four subsoil licenses in the Volga Region of European Russia For additional information please contact: Financial DynamicsJonathon Brill +44 (0)20 7269 7170Billy Clegg +44 (0)20 7269 7157Alex Beagley +44 (0)20 7269 7207 KBC Peel Hunt (Nominated Adviser) +44 (0)20 7418 8900Jonathan MarrenAlina Savych The information contained in this announcement has been reviewed and verified byMr. Mikhail Ivanov, Director and Chief Executive Officer of Volga Gas plc, forthe purposes of the Guidance Note for Mining, Oil and Gas companies issued bythe London Stock Exchange in March 2006. Mr. Mikhail Ivanov holds a M.S. Degreein Geophysics from Novosibirsk State University. He has also MBA degree fromKellogg School of Management (Northwestern University). He is a member of theSociety of Petroleum Engineers. This information is provided by RNS The company news service from the London Stock Exchange