Investment Update

RNS Number : 6503L

Xtract Energy plc

11 May 2010

 



11 May 2010

AIM: XTR

XTRACT ENERGY PLC

Investment Update - Drilling Approved For Kyrgyz Republic

Xtract Energy Plc ("Xtract" or "the Company") 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.

Further updates will be provided as appropriate.

Qualified Person

In accordance with AIM Guidelines, Dr Neale Taylor who is a Director of wholly owned subsidiary Xtract International Ltd and former Director of Zhibek Resources Limited, is the qualified person, as defined in the Guidance Note for Mining, Oil and Gas Companies, February 2010, of the London Stock Exchange, who has reviewed the technical information contained in this press release. Dr Taylor holds a bachelor's degree with honours in applied geology, a master's degree in petroleum engineering, a master's degree in business administration and a doctorate in business and has more than 40 year's experience in the petroleum exploration and production industry in Australia and central Asia. He is a member of the Society of Petroleum Engineers and a Fellow of the Australian Institute of Company Directors.  

Enquiries please contact: 

Xtract Energy	Andy Morrison, CEO	[phone]
Cenkos Securities Plc	Jon Fitzpatrick Ken Fleming Alan Stewart	[phone] [phone]

About Xtract Energy

Xtract identifies and invests in a diversified portfolio of early stage energy sector technologies and businesses with significant growth potential. The Company aims to work closely with the associated management teams to achieve critical project milestones, to finance later development stages, and to build and crystallise value for all shareholders and partners.

For further information on Xtract please visit www.xtractenergy.co.uk 

A short description of the principal assets of Xtract is set out below. These assets are either held directly or through wholly owned subsidiaries of the Company.

Extrem Energy AS ("Extrem Energy")

Extrem Energy is an exploration and production joint venture with Merty Energy of Turkey. The JV's aim is to create a new medium-sized oil and gas exploration and production business, initially focused on Turkey where Merty Energy has particular experience and expertise. Extrem Energy has a portfolio of licence interests including the high potential prospect at Candarli Bay in south-west Turkey. Xtract owns 50% of the issued share capital of Extrem Energy.

Elko Energy Inc. ("Elko")

Elko is a Canadian registered oil & gas exploration company, which has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset is in the Danish North Sea; an 80% interest on 26 offshore blocks in a 5,400 sq km exploration and production licence close to the prolific Central Graben oil field. Technical work indicates the potential for significant reserves. Elko also holds a 60% operating interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea. Xtract owns approximately 50.0% of Elko's issued share capital.

Zhibek Resources Ltd ("Zhibek Resources")

Zhibek Resources is an oil and gas exploration and production company, which has a 72% interest in the Tash Kumyr exploration licence in the Kyrgyz Republic. Xtract has entered a farm-out agreement with Santos International Holdings Pty Ltd to fund a seismic and drilling programme for 2008-10. Xtract owns 25.0% of the issued share capital of Zhibek Resources through its wholly owned subsidiary, Xtract International Ltd.

Xtract Oil Ltd ("XOL")

Xtract's wholly owned subsidiary, XOL, is focused on the development of the Company's oil shale resources in Australia and the technology for oil extraction from oil shale resources. Xtract has oil shale exploration rights over mining tenements in the Julia Creek area of Queensland. In addition to evaluating third party technologies, XOL has been developing proprietary technology for the commercial extraction of liquid hydrocarbon products from oil shale.

Xtract Energy (Oil Shale) Morocco SA ("XOSM")

XOSM is a joint venture with Alraed Limited Investment Holding Company WLL, a company controlled by His Highness, Prince Bandar Bin Mohd. Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed a Memorandum of Understanding with the Office National des Hydrocarbures et des Mines for the purposes of evaluation and possible development of an oil shale deposit near Tarfaya, in the south west part of Morocco. Xtract currently holds 70% of the joint venture.

 

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