International Petroleum Limited (NSX: IOP) (“International Petroleum” or the “Company”), an oil and gas exploration company with assets in Kazakhstan and Russia, is pleased to announce that oil has been found during drilling of Well No. 1 at its Krasnoleninskiy Project in Western Siberia.
Preliminary investigations on core taken from Well No. 1 to date indicate that 21 metres of fractured, oil-saturated core has been recovered from the Bazhenov formation in the interval of 2,595 to 2,624 metres, a further 0.5 metres of oil-saturated core has been recovered from the Abalak formation in the interval of 2,624 to 2,633 metres, and 12 metres of oil-saturated core has been recovered from the Tyumen formation in the interval of 2,645 to 2,655 metres. Coring will continue through the prospective Tyumen formation and any other zones of interest, followed by electrical wire-line logging to access the potential of these formations.
In April 2011, the Company announced the spudding of Well No. 1 and Well No. 2 at its Krasnoleninskiy Project which comprises a 75% equity interest in the exploration rights to four blocks in Western Siberia. The four blocks cover a total area of 1,467 km˛ and are located in the Khanty-Mansiysk Region in Western Siberia, the largest oil-producing region of Russia.
The four licence blocks have been extensively surveyed by 1,450 kilometres of closely spaced 2D seismic, which identified more than thirty prospects, including five “superstructures”. Within these superstructures, there are a number of potential reservoirs, ranging in age from Palaeozoic to Cretaceous, stacked upon each other, offering the potential of multiple producing zones in a single well. In a report to evaluate the hydrocarbon resource potential dated 1 July 2010, Ryder Scott Company-Canada (“Ryder Scott”), an independent oil and gas consultant, estimated the unrisked prospective (undiscovered recoverable) resources of the four blocks at 169 (Low Estimate), 260 (Best Estimate) and 385 (High Estimate) million barrels. Based on the undiscovered unrisked resource estimates and scoping type resource economic evaluation reports from Ryder Scott and the oil show in Well No. 1, the Company believes that the Krasnoleninskiy Project has significant exploration potential.
Well No. 1 and Well No. 2 at the Krasnoleninskiy Project have planned target depths of 2,850 metres and 2,930 metres respectively to investigate formations ranging in age from Cretaceous down through the weathered crust of the Palaeozoic. These two wells are two of four wells that are planned to be drilled at the Krasnoleninskiy Project and are currently being drilled simultaneously, using two separate drilling rigs, in two of the four licence blocks.
Drilling at Well No. 1 is currently at a depth of 2,672 metres.
Drilling at Well No. 2 is currently at a depth of 2,658 metres, and coring has commenced.
Chris Hopkinson, International Petroleum CEO said “This discovery at the Krasnoleninskiy Project is very important. It is a clear result of the focussed and detailed exploration analysis that International Petroleum has undertaken since the acquisition. It is important to note that we still have a number of horizons to penetrate and evaluate in this well, and that we are close to penetrating the same sequences in Well No. 2”.
“I, and the rest of the management team are committed to achieving early production and, to that end, are already actively working on options to implement should this discovery prove to have the potential that the initial data indicates”.
Commenting on the discovery of oil, Tony Sage said, “This is an important discovery for International Petroleum in that it validates the confidence that management has in our Russian assets. This discovery de-risks the other prospects in the Krasnoleninskiy Project and provides International Petroleum not only with more confidence in the remainder of this drilling campaign but potentially with a building block for production in the relatively near term.”
The Company also advises that it has secured a US$10 million standby facility (“Standby Facility”) to fund exploration expenditure and working capital.
Pursuant to the terms of the Standby Facility, the Company will have access to US$10 million, and the amount drawn down under the Standby Facility (“Facility Amount”) will be repayable by the Company in full on the earlier of 18 months, receipt by the Company of cash consideration from Nkwe Platinum Limited (ASX: NKP) (“Nkwe”) under its agreement with Nkwe for the sale of the Company’s interest in the Tubatse project (comprising a 10% interest in the 3 farms located in the eastern limb of South Africa’s Bushveld Complex, namely Hoepakrantz, Nooitverwacht and Eerste Geluk (the “Tubatse Project”)) or, receipt by the Company of other funds. Any funds received by the Company must first be applied by the Company to reduce the Facility Amount.
Interest is payable on the Facility Amount at the cash rate plus 3% and the Standby Facility is secured by a fixed and floating charge over the Company. The Company is also obliged to pay a US$250,000 commitment fee for the provision of the Standby Facility.
The Company anticipates that a payment pursuant to its agreement with Nkwe will be received in the coming months and that the Company will use those funds to discharge the Facility Amount.