BNG Update and January 2020 Production

RNS Number : 4015C

Caspian Sunrise plc

10 February 2020

 

Caspian Sunrise PLC

("Caspian Sunrise" or the "Company")

BNG Update and January 2020 Production

The Board of Caspian Sunrise is pleased to update the market with developments at its BNG and 3A Best Contract Areas, together with January 2020 production numbers.

BNG

Deep Well A5

Introduction

As previously announced, on 31 December 2019, after perforation of a 63 meter interval between 4,331 meters and 4,394 meters, the well started flowing without artificial stimulation.

Also as previously reported, the oil recovered is light oil of high quality with an API of 37 degrees.

Current position

We are delighted to report the well has now flowed for 40 days.

The Company's management remains pleased with progress at Deep Well 5 and continues to believe the well is capable of producing at least 1,500 bopd.

At this early stage however, and based on past experience, our focus has been to ensure the well continues to flow rather than to seek to maximise flow rates. We have sought to achieve this by maintaining a constant pressure through regular adjustments to the choke size, thereby reducing the risk of blockages from excess drilling fluids and other well debris.

We are in no hurry for the well to reach its optimum operating capacity and are considering a number of actions which may help maximise the ultimate contribution the well makes to the Company's fortunes.

For example, our operational team believes the well would benefit from acid treatment. Accordingly, later in February we shall begin operations to conduct an acid job using hydrochloric acid ("HCL"). This acid treatment will be designed to use sufficient pressure to push the acid into the existing reservoir but without fracturing the reservoir. These operations are expected to take three days.

Other Deep Wells

Deep Wells A8, 801 & A6

We continue to wait on the results of a new chemical analysis to determine the best way to stimulate these wells using high pressure acid treatments.  As previously reported we are using a specialist laboratory in Western Europe to evaluate using a different acid designed to directly attack the barite mud used to control the wells during the high pressure drilling phase rather than acid used to date, which may be better suited to attacking rock.

Once the results of this analysis are received these wells will receive the appropriate acid treatment.

Deep Well A9

As previously announced the next deep well there is expected to be Deep Well A9, which, if successful, would extend the perimeter of the Airshagyl structure.

Our intention is to spud Deep Well A9 in the first half of 2020. Preparatory work continues with a view to selecting a drilling contractor before the end of Q1 2020.

Shallow Wells - MJF

As previously stated a prime focus remains the continued development of the MJF structure. These wells are usually quick to drill, test and bring into production and the bulk of the oil produced is available to be sold by reference to world rather than domestic prices. Consequently, we have two drilling rigs and one workover rig in operation on the MJF structure and intend to add a third drilling rig when operating conditions improve.

Existing wells

Oil production from the 5 producing MJF wells increased by 4 per cent. compared to December.

Further details of the January 2020 production numbers are set out below.

New wells

We reported at the end of 2019 that six new MJF well sites have been prepared for drilling, so avoiding this work being undertaken in the worst of the winter difficult winter conditions.

Well 150 was spudded in mid-December with a Total Depth of some 2,500 meters. To date the well has reached a depth of 1,420 meters without incident.

Well 153, which has a target spud date of Mid-February has 60 days allocated for drilling and testing, so that we expect it to be on production by the end of Q2 2020.

3A Best

As previously reported we have been working for some time with the Kazakh authorities to revise the work obligation under the existing licence.

We are therefore pleased to report agreement has been reached on a new work programme under which we have the obligation to drill one exploration well to a depth of 2,500 meters.

We are in discussions with drilling contractors based in the Aktau area in preparation for a H1 2020 spud.

January 2020 oil production figures

The total number of barrels produced in January 2020, was 44,169 (December 2019, 43,498) at a daily rate of 1,425 bopd (December 2019, 1,403). Deep Well A5 contributed 1,887 barrels in January, which was sold at domestic prices.

Production in January would have been approximately 2,770  barrels greater had we not been required to cease production at three wells (805, 806 & 807) first drilled in Soviet times, resulting from our application for the shallow South Yelemes structure as a whole moving onto an Export basis, similar to the MJF structure.

In January 2020, 66% of oil sold was at export prices and 34% at domestic prices (December 2019, 64% & 36%).

The export price achieved in January 2020, before adjustment for subsequent minor variations, was $59.6 per barrel (December 2019, $59.6 per barrel) and the domestic price was $18.75 per barrel (December 2019, $18 per barrel).

General Meeting

Shareholders are reminded of the Company's General Meeting to be held at the offices of Fladgate 16 Great Queen Street, London WC2B 5DG at 11.00 Thursday 13 February 2020, to consider and if thought fit approve the $25 million purchase of the Caspian Explorer, a shallow water drilling vessel designed for use in the northern Caspian Sea.

The proposed acquisition is to be funded by the issue of 160,256,410 new shares at a price of 12p per share, with the vendor shareholders locked-in for a 3 month period from completion.

Further details of the proposed acquisition may be found at the company's website  www.caspiansunrise.com

Comments:

Clive Carver, Executive Chairman said:

"Deep Well A5 has now flowed longer than any of our deep wells drilled to date and we continue to believe once optimised it will produce at the rate of at least 1,500 bopd.

Given the importance of the A5 well and the Airshagyl structure generally we are taking our time in assessing what is best for the long term contribution the well will make to the Company's fortunes.

We look forward to updating shareholders once the results of the planned acid treatment are known.

Otherwise it is business as usual in possibly weather-wise the most difficult part of the year."

Contacts:

Caspian Sunrise PLC

Clive Carver

Executive Chairman                                                                [phone]

WH Ireland, Nominated Adviser & Broker

James Joyce                                                                            [phone]

James Sinclair-Ford

Qualified person

Mr. Nurlybek Ospanov, Caspian Sunrise PLC's Chief Geologist / Technical Director who is a member of the Society of Petroleum Engineers ("SPE"), has reviewed and approved the technical disclosures in this announcement.

This announcement has been posted to:

www.caspiansunrise.com/investors

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

 

END

 

 

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