Xtract Regulatory News (XTR)

8 Jan 2008 10:37

Xtract Energy plc08 January 2008 8 January 2008 AIM: XTR XTRACT ENERGY PLC ("Xtract" or the "Company") PROJECT UPDATE - MEO Australia Ltd Xtract refers shareholders to the following press release information announcedin Australia by MEO Australia Ltd ("MEO"). Xtract also notes that trading in MEO's shares on the ASX has resumed following the publication of theannouncement below. Xtract currently holds approximately 15.7% of the issued capital of MEO. "ASX RELEASE HERON-2 WELL UPDATE MELBOURNE, AUSTRALIA (January 8, 2008) - MEO Australia Limited (ASX: MEO)advises the market that Cyclone Helen interrupted testing operations forapproximately 48 hours and the joint venture partners are now continuing to testthe Elang/Plover formation in the Heron-2 well. The following table summarizes the interpreted geological sections below the 7inch casing shoe. Interpreted Drilled depth (m) Thickness Mud log Relative mudSections (m) observations losses Elang sand 3946 - 3961 15 Dry gas, high Low CO2 Elang shale 3961 - 3980 19 N/A N/A Upper Ploversand 3980 - 4081 101 Wet gas, nil Medium CO2Ploversiltstone 4081 - 4119 38 N/A N/A Lower Ploversand 4119 - 4182 (current TD) 63 Wet gas, nil High CO2Estimated GWCand mappedspill point 4260m To date, only the Elang sand (15m) is believed to have flowed gas to surface. Asobserved on the mud gas logs through this section where only methane (C1) andcarbon dioxide (CO2) was recorded, the recovered gas is dry and high in CO2. Thepreliminary maximum flow rate through a 26/64 inch choke in this poor qualityElang sand was estimated at 6 MMscf/day. The mud gas logs through the better quality Plover formations sands (164m)recorded high values of C1 to C5, indicative of wet gas readings, and no CO2.While drilling the Plover formation, the well experienced the most significantlosses of synthetic based mud (SBM) (1,180 bbls) in zones of extensivefracturing. Subsequent LCM (loss circulation material) treatment stopped theexcessive mud losses but effectively inhibited the Plover formation'spermeability. Based on the inhibited Plover permeability, the quality of the produced gas andthe volume of drilling fluids recovered on testing, the well test consultantsbelieve that only the Elang sand has so far contributed to the current gas flow. The Elang sand appears to be isolated from the underlying Plover sands by theElang shale unit, which would explain the significant difference in mud gasreadings, pore pressure variation and possible gas quality. The rig progressed with well clean-up activities, particularly focussing on thePlover sands where the LCM treatment appeared to have blocked the permeablefracture zones. The rig recovered the production test string and ran into thehole with the drilling pipe and a 2 3/8 inch stinger passing through the packerin the 7 inch liner in order to reach and clean the bottom of the borehole. Ablockage has been encountered at the base of the Elang formation, at thetransition of the 8 1/2 inch and 6 inch hole, possible a combination of cementplug material, collapsed siltstone, SBM and LCM. This blockage in combinationwith the LCM treatment of the Plover is now believed to have stopped the Ploversands from flowing. Forward plans: The substantial losses of the expensive and limited onboard stock of syntheticbased mud in the lower Plover sands caused the premature cessation of drilling.The rig will now mill out the packer and drilling will resume to sidetrackaround the blockage (at 4025m) to drill a fresh Plover sand section and todeepen into the better sands observed in the lower Plover. The well will bedrilled with a water based mud and lower mud weight (to reduce the risk offurther mud losses). At the completion of drilling, a slotted 4 1/2 inch linerwill be run and the Plover formation will be production tested. At the completion of the Plover test, the well will be plugged back to the baseDarwin formation, the 9 5/8 inch casing will be perforated and the gas chargedzones of the Epenarra structure will be production tested. MEO remains optimistic that a significant, quality hydrocarbon resource ispresent in the Plover formation and believes that based on regional geologicalcorrelations and 3D seismic interpretation, further good quality gas saturatedsands, remain to be drilled below the current TD (4182m) at this location." Further information on MEO can be found at www.meoaustralia.com.au. As an ASXlisted company, MEO is not subject to the AIM Rules and this drilling update hasnot been reviewed by a named "qualified person" as defined and required by theAIM Guidance Note for Mining, Oil and Gas Companies. Enquiries please contact: Xtract Energy plc Andy Morrison, CEO +44 (0) 20 7079 1798 Smith & Williamson Corporate David Jones +44 (0) 20 7131 4000Finance Limited Azhic Basirov Scott Harris Stephen Scott +44 (0) 20 7653 0030 Annabel Michie For further Information on Xtract please visit www.xtractenergy.co.uk About Xtract Energy Plc Xtract identifies and invests in a diversified portfolio of early stage energysector technologies and businesses with very significant growth potential. Weaim to work closely with the associated management teams to achieve criticalproject milestones, to finance later development stages and to build andcrystallise value for all shareholders and partners. Xtract is supported by its cornerstone investor, Cambrian Mining Plc (AIM:CBM) adiversified resource investment house which holds approximately 50.3% of issuedshare capital. A short description of the principal assets of Xtract is set out below. Theseassets are either held directly or through wholly owned subsidiaries of theCompany. MEO Australia MEO is focused on developing gas-to-liquids ("GTL") projects in the Timor SeaAustralia, in an area of shallow water known as Tassie Shoal. It has securedCommonwealth Government environmental approvals for two large scale (1.8 Mtpa)methanol plants (50 per cent. interest) and a 3 Mtpa LNG plant (100 per cent.interest) which are adjacent to the Evans Shoal gas field. Elko Energy Elko is an oil & gas exploration company which has an interest in a 5,370km2exploration and production licence in the Danish North Sea and an investment inDragon Energy Inc, a private Canadian company, with a development project inGansu Province, China. Wasabi Energy Wasabi is a diversified investor in renewable energy and low greenhouse emissiontechnologies, with interests in geothermal waste/heat, uranium exploration inAustralia's Northern Territory and biodiesel investments in Victoria. Central Asian Interests Xtract's Central Asian interests include a production sharing agreement withKyrgyzneftegaz to instigate a water injection project on the Beshkent- Togap oilfield. Xtract also holds interests in several exploration licences in the TashKumyr area and in the Toktogul exploration licence. Oil Shale Xtract has oil shale and related petroleum product exploration rights overmining tenements in the Julia Creek area of Queensland and has recently beengranted an exploration permit which gives rights to explore for oil shale in anarea in the South of New Zealand. It is investigating the commercial productionof hydrocarbons (crude oil) from oil shale. Xtract is also available for trading on the open market segment of the FrankfurtStock Exchange (ticker R9X.FSE). This information is provided by RNS The company news service from the London Stock Exchange