VGAS.L Regulatory News (VGAS)

25 Aug 2009 07:00



25 August 2009

VOLGA GAS PLC

Karpenskiy supra-salt operational update

Volga Gas Plc ("Volga Gas" or the "Company") is pleased to provide an update on supra-salt drilling and development activities in its Karpenskiy Licence Area.

Highlights

The Yu-Uz#8 development well on the Yuzhno-Uzenskaya field has been drilled and has tested productive oil pay.  

The Yu-Uz#9 development well has been completed and has started production.

The Uz#6 well, previously announced as unsuccessful, has been successfully sidetracked and is expected to start producing imminently.

Production from the Uz #3, 4 and 5 wells is now running at over 1,600 barrels of oil per day with on average less than 1% water cut.

Production from the Uzenskaya area in 4Q 2009 is expected to reach a sustainable rate of over 2,500 barrels of oil per day.

Yuzhno-Uzenskaya #8 results

The Yuzhno-Uzenskaya # 8 development well was spudded in July 2009 targeting the principal Cretaceous reservoir. The well has reached its planned target depth of 992.3 metres (TD RT). 

Cretaceous Albian sandstone reservoir was tested at between 785 and 802 metres (MD RT). Under the brief open hole test, a flow rate equivalent to 240 m3 per day (1,512 barrels per day) of oil was achieved from the well in the Albian reservoir. 

On conclusion of further test procedures, the Yuzhno-Uzenskaya #8 well will be connected to the facilities and is planned to be put on production during September 2009.

Yuzhno-Uzenskaya #9 update

The Yuzhno-Uzenskaya #9 development well, drilled during July 2009, has been connected to the field facilities and has just started production.

Uzenskaya #6bis

The original Uzenskaya #6 well was drilled during 1Q 2009. As announced on 30 March 2009, the principal productive reservoir was absent in the well. Subsequently a deviated section was drilled from the initial well - Uzenskaya #6bis - and this well was successful in intersecting net pay of 8 metres in the principal Cretaceous Aptian reservoir. The well has been completed with a slotted liner run in the deviated open hole producing section. In-field flow lines have been installed and production is to commence imminently.

Production update

Since the beginning of 2009 oil production from the Uzenskaya area has risen steadily from an average 311 barrels of oil per day in January 2009, from Uz#3 well, to an average of 1,620 barrels of oil per day in July 2009, from three wells - Uz#3, 4 and 5.

During August, the three existing producing wells were subject to routine testing. Production from these wells continues steadily and with water cuts of 1% or less.

With the new wells being brought on stream during September 2009, total production from the Uzenskaya area is expected to rise above 2,500 barrels of oil per day during 4Q 2009. Minimal further capital investment will be required on the Yuzhny-Uzenskaya field other than an additional oil separator and further storage capacity.

Mikhail Ivanov, Chief Executive of Volga Gas commented:

"We are delighted with our recent successful drilling activities on Yuzhny Uzenskaya where we will have a total of six wells in production. We look forward to sustaining production from the Uzenskaya field area at significantly higher levels for the remainder of 2009 and to investigating further opportunities to expand our supra-salt development activity in the Karpenskiy Licence Area."

"We look forward to updating the market as to progress on our other operations along with our Interim results on 16 September 2009."

For additional information please contact:

Notes to editors:

Volga Gas is an independent oil and gas exploration and production company operating in the Volga region of European Russia. The company has 100% interests in its four licence areas.

The information contained in this announcement has been reviewed and verified by Mr. Mikhail Ivanov, Director and Chief Executive Officer of Volga Gas plc, for the purposes of the Guidance Note for Mining, Oil and Gas companies issued by the London Stock Exchange in March 2006. Mr. Mikhail Ivanov holds a M.S. Degree in Geophysics from Novosibirsk State University. He has also MBA degree from Kellogg School of Management (Northwestern University). He is a member of the Society of Petroleum Engineers.

- Ends -