19th Feb 2008 07:00
19 February 2008
SUBJECT: OPERATIONS REPORT - OMAN DRILLING PROGRAM
Oilex Ltd advises that preparations are underway to conduct a cased hole Drill Stem Test (DST #2) of the Al Khlata Sandstone over the interval 1255 - 1295 metres Measured Depth (MD) in the Sarha-1 well in Exploration and Production Sharing Agreement area Block 56, Oman.
During the past week, open hole DST #1A was conducted over the interval 1626 - 1641 metres. Saline water was recovered which is interpreted to be formation water, the origin of which is either the Haima Sandstone or the Huqf Formation by connection to a major fracture system originating at depth within that unit. Further review of well and test data will be carried out to determine whether the potential of the Haima and Huqf intervals have been definitively evaluated by open hole testing given the poor hole conditions in this part of the section.
DST #1 had been conducted over the interval 1626 - 1676 metres incorporating the Haima Sandstone and the upper part of the Huqf Formation, interpreted to be a heavily fractured carbonate interval over which a marked resistivity anomaly was recorded along with oil shows. A large volume of drilling mud was lost to the formation and no cuttings or formation fluid was recovered during drilling of the Huqf carbonate section. The fracture system is likely to extend from the top of the formation to the base of the drilled section and the fractures provide conduits for preferential flow possibly from zones deeper than the total depth of the well (1890 metres). In the event that the formation fluid corresponding to the resistive interval is oil of gravity 200-280API, it is likely that water from deeper aquifers would preferentially flow through the fracture system on test.
Tests will be conducted at shallower depths in the well. The test intervals will have additional cement placed above and below the levels of interest to mitigate the effects of poor cement bonding that is the result of poor hole conditions and partial loss of fluids during drilling of the well. We anticipate that following the cementing operations, the series of production tests in the Sarha-1 well will continue with the objective of determining whether moveable hydrocarbons are present in the Al Khlata Formation and the Lower Gharif sandstone as tabulated below:
DST Objective Test Gross Interval(metres MD) #1 Haima/Huqf Open Hole 1626 - 1676 #1A Haima Open Hole 1626 - 1641 #2 Al Khlata Cased hole 1255 - 1295 #3 Lower Gharif Cased Hole 1165 - 1185
The quality of the oil in the oil fields of the South Oman Salt Basin is variable from lighter, mobile fluid to heavier, viscous oil. In the event that "heavier" more viscous oil is present in these reservoirs at Sarha-1, testing of these zones includes the installation of a pump and an extended flow period to establish stabilised rates.
Participants in the Block 56 Exploration and Production Sharing Agreement areaare:Joint Venture Party Participating Interest Oilex (Oman) Ltd (Operator) 25% Videocon Industries Limited 25% GAIL (India) Limited 25% Hindustan Petroleum Corporation Limited 12.5% Bharat Petroleum Corporation Limited 12.5% Yours sincerely,B. H. McCarthyManaging Director
For further information, please contact:
Ray Barnes, Technical Director, Oilex Ltd Tel. +61 8 9226 5577 (Western Australia)
Archie Berens, Director Pelham Public Relations Tel. +44 20 7743 6679 (United Kingdom)
RFC Corporate Finance Ltd acts as Oilex's Nominated Adviser, contact Stuart Laing +618 9480 2506
The information in this report has been compiled by the Managing Director of Oilex Ltd, Bruce McCarthy B.Sc. Hons. PhD (Geology) who has over 29years experience in petroleum geologyand Ray Barnes, B.Sc. Hons.the Technical Director of Oilex Ltdwho has over 35 years experience in petroleum geology and is a member of the AAPG & EAGE. Estimates ofoil-in-place arereported in accordance with the standard definitions set out by the Society of Petroleum Engineers, further information on which is available at www.spe.org.
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