The Board of Jupiter Energy Limited is pleased to provide shareholders with an important operational update. The J-50 well has reached a total depth of 3156m and wireline logs have been run over the weekend and on Monday.
Initial interpretations of wireline log data indicate that the top of the Middle Triassic reservoir is at 2911m, which is 28m higher than previously reported. The interpretations show that a 43m interval of nett hydrocarbon pay has been intersected in a gross column of 120m. The nett pay interval and also the nett to gross ratio are higher than the Company had originally prognosed at the J-50 well location. The interpretations are provisional and will be optimised as additional data such as results from core analysis become available. Operations on the J-50 well have continued towards casing and cementing the well prior to running the completion and production testing.
The Company also announces the placement of 100 million shares to mainly institutional investors from Australia and the UK. This placement will raise $A6.5 million (before costs) and enable the Company to commence several projects earlier than originally planned thereby allowing the Company to achieve some important milestones and objectives prior to June 30 2010, the expiry date of the listed JPROA options.
The major milestones and Company objectives brought forward by the placement include:
- Tendering for drilling equipment and services for the J-51 well in April.
- Acquisition of long lead-time capital items such as wellheads and casing for the J-51 well.
- Hiring additional operations personnel to bring forward the schedule for production testing of NWZ-2 well production rates, thereby confirming flow rates from Block 31's 2nd well before June 2010.
- Upgrade from temporary to permanent topside processing and storage infrastructure for both the J-50 and NWZ 2 wells.
- Acquisition of additional acreage in the Mangistau region, with the primary objective being to increase potential oil reserves.
- Tendering for new exploration and/or production permits in or outside the Mangistau region as opportunities become available. The tender process includes being able to financially structure an initial bid that is independent of a capital rising.
For the benefit of shareholders, additional information on these milestones and objectives is detailed below.
J-51 Well
The J-51 well is the Company’s commitment well for 2010. This well is planned as a step out from J-50 and is prognosed to intersect the same Block 31 Middle Triassic reservoir objective and have similar production characteristics as the J-50 well. The Company plans to spud J- 51 as soon as possible to take advantage of the warmer summer months of June and July.
The placement funding will be used to purchase long lead-time capital items such as casing prior to spud. In addition, the drilling rig service contract will be tendered and the final contract may include the requirement for a pre-payment or mobilisation charge for moving the rig to the J-51 location prior to spud.
The combined budget for the J-51 well will be in excess of $US5 million and without raising funds now, the acquisition of long lead time items and securing of the rig cannot be undertaken and the well spud date would slip to probably September 2010. This delay would, in turn, lead to the onset of less favourable operating conditions.
The benefit of achieving an early start to operations on the J-51 well is that the follow up production test and trial production should commence sooner than budgeted. The major advantage of commencing the J-51 well project early is the potential for several months of extra revenue from export oil sales, over and above what the Company had originally budgeted.
