Xtract Energy Plc is pleased to advise that approval has been received for the commencement of drilling an exploration well in late 2010 or early 2011 by the joint venture company CJSC KNG Hydrocarbons ("KNG HC") on its Tash Kumyr licence area in the Kyrgyz Republic.
The partners in KNG HC are Zhibek Resources Ltd ("Zhibek") which owns 72% and CJSC Kyrgyzneftgaz which owns 28%. KNG HC's shareholders approved drilling of the Karagan-1 well at their April AGM. Xtract holds 25% of Zhibek, Santos International Holdings Pty Ltd ("Santos") owns 75%. The Kyrgyz Government holds a controlling interest in CJSC Kyrgyzneftgaz
Well Programme - Karagan-1 (Tash Kumyr licence area)
Under the terms of the November 2008 farm-in agreement between Xtract and Santos, Santos acquired over 100 km of new 2D seismic data in the Tash Kumyr area commencing in late 2008; the seismic data was subsequently processed and interpreted during 2009. The Tash Kumyr licence is located on the eastern margin of Fergana Basin, which is a prolific hydrocarbon basin in the Kyrgyz Republic.
The seismic interpretation, which was conducted by Santos' technical team, identified a new prospect called Karagan, which is believed to be a fault controlled trap that sits between the producing Mailisai oil field nearby to the west and the Kyzyl Alma gas and Mailisu oil fields to the east. Karagan is on trend and analogous to the Kyzyl Alma gas field, which has been producing gas and gas liquids from Jurassic sandstones since 1968.
Karagan-1 is planned to target the same Jurassic sandstones that produce gas at Kyzyl Alma. There is also potential for hydrocarbons to accumulate at Karagan in overlying Cretaceous sandstones, which are well developed at Mailisai. Santos estimates that the Karagan prospective structure has a mean area of 12 square km and an anticipated net productive pay thickness of 20m. The expected depth for the top of the Jurassic sandstones is approximately 2600m.
The pre-drill mean estimate of the potential recoverable gas from a discovery at the Karagan prospect is 65 billion cubic feet (gross) (approximately 15 million barrels of oil equivalent). There is a local market for gas in the Kyrgyz Republic, which currently imports gas from Uzbekistan and other adjoining areas via an extensive regional pipeline network
Tenders have been received for a rig to drill this well and the selected rig will be mobilized to the site in preparation for the planned commencement of drilling late 2010 or early 2011 depending on rig availability and mobilization timing.
Xtract's share of costs for the exploration drilling will be approximately US$1.5 million.