VGAS.L Regulatory News (VGAS)

22 Aug 2007 07:00

Volga Gas PLC22 August 2007 22nd August 2007 VOLGA GAS PLC Drilling Report and Operational Update Volga Gas Plc (the "Company"), the independent gas exploration and productioncompany, which currently holds three subsoil licences in the Volga region ofEuropean Russia, today announces a drilling report for Uzenskaya #2 on theKarpenskiy licence area and an operational update. Highlights: Karpenskiy Licence Area - Supra-Salt • Uzenskaya Well #2 tested water at high rates • Uzenskaya Well #1 to be put on production before the end of the year • Contracted to acquire 140km2 of 3-D seismic to cover six supra-salt structures • Drilling programme to recommence after processing and interpretation is complete Karpenskiy Licence Area - Sub-Salt • 160 km2 of 3-D seismic complete on Yuzhny-Mokrousovsky structure • Schlumberger undertaking processing and interpretation Vostochny-Makarovskoye Licence Area • BK Eurasia constructing rig on site. Drilling to commence in late September • 20km2 3-D seismic to be acquired in early September 2007 Pre-Caspian Licence Area • Contracted with Saratovneftegeophysika to acquire 1,500km of 2-D seismic. Contract to commence in winter 2007. Karpenskiy Licence Area - Supra-Salt Uzenskaya Well #2 reached TVD of 1098m. Two potential reservoirs were tested inthe Jurassic (962.5-975.0 meters) and Triassic (1048.0-1058.0 meters) layers.Both tested high rates of water, confirming the layers have good collectorproperties. The structure, however, was not closed and the well is now beingliquidated. Uzenskaya Well #1 has completed testing and will be brought into production bythe calendar year-end. Reserves, according to SPE standards, will be releasedduring the first half of next year along with the resource updates fromKarpenskiy 3-D operations. Six potential near term shallow supra-salt structures have been identified onthe Karpenskiy licence area. Saratovneftegeophysika will acquire 140km2 of 3-Dseismic in winter 2007 and the drilling programme will continue in 2008 oncethis data has been processed and interpreted. Karpenskiy Licence Area - Sub-Salt Saratovneftegeophysika has completed the acquisition of 160 km2 of 3-D seismicon the Yuzhny-Mokrousovsky structure as per plan. Schlumberger is now processingand interpreting that data. Field operations will recommence in H1 2008 with thecommencement of drilling operations on Yuzhno-Ershovsky and Yuzhno-Mokrousovskystructures. Vostochny-Makarovskoye BK Eurasia has started constructing a rig on Vostochny-Makarovskoye for thedrilling of the first production well. Drilling operations will commence once 20km2 of 3-D seismic has been acquired. This seismic is required to design themost efficient production drilling programme. The Company has entered in to a Memorandum of Understanding with Trans Nafta forthe construction of gas-condensate processing facilities and connection toGazprom's pipeline. Design work is mostly complete for Phase 1 facilities andthe plant is expected to be operational in time for first production at the endof 2008. Pre-Caspian Saratovneftegeophysika have been contracted to acquire 1,500km of 2-D seismicover potential sub-salt and supra-salt structures. Work will commence in 4Q2007. Mikhail Ivanov, CEO of the Company, commented: "The supra-salt work we are undertaking on the Karpenskiy Licence Area isproving fruitful. We can expect first production from Uzenskaya #1 by the end ofthe calendar year and the Uzenskaya #2 well confirms good collector propertiesin the Jurassic and Triassic formations. The 3-D seismic we plan to acquire thiswinter will allow us to delineate structures accurately and to develop a nearterm, rapid and sustained supra-salt drilling programme to complement the workwe are doing on the larger Karpenskiy sub-salt structures and atVostochny-Makarovskoye, which is progressing to plan." For additional information please contact: Financial Dynamics Jonathon Brill +44 (0)20 7269 7170Billy Clegg +44 (0)20 7269 7157Ekaterina Alferova +44 (0)20 7269 7257 KBC Peel Hunt Ltd (Nominated +44 (0)20 7418 8900Adviser and Joint Broker) Jonathan 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