1st Jul 2008 07:00
PRESS RELEASE
For immediate release: 1st July 2008
Matra Petroleum plc ("Matra" or the "Company") (AIM: MTA)
Russian Operations Update
Following the successful acid treatment on Well A12, Matra is pleased to provide an operational update on the Sokolovskoe discovery in the Arkhangelovskoe Licence in Orenburg, Russian Federation. Matra holds 100 per cent. of the Arkhangelovskoe Licence.
Recoverable Contingent Resource Estimates
Independent consultant Senergy Limited ("Senergy"), who prepared the pre-drill independent report on the Sokolovskoe structure, has calculated a recoverable contingent resource range for the Sokolovskoe discovery based on mapping derived from new and reprocessed seismic and with the inclusion of data from A11 and A12 wells. The new map shows Well A12 to be on the western flank of the structure and the currently untested crest of the structure to be 37 metres higher and around 2.6km to the East.
Senergy reviewed the potential development and economics of the field for the best estimate case. This case assumes a development with 21 producing wells and 7 water injection wells drilled during the whole field life, with peak production of around 8,500 barrels per day reached in 2012.
The resources reported by Senergy are in accordance with the joint reserves/resources definitions of the Society of Petroleum Engineers, the World Petroleum Congress and the American Association of Petroleum Geologists.
Senergy's estimate of Recoverable Contingent Resources net to Matra
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Million STBBL
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Low
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4
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Best
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19
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High
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56
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The economic valuation of the best estimate case, using a domestic oil price of US$58/bbl, calculates a Net Present Value (NPV) of US$172 million at a 10% discount rate.
A glossary of terms used in this resource estimate is set out in the appendix to this announcement.
Notes:
Resource definitions are in accordance with the guidelines of the Society of Petroleum Engineers under which oil may not be classified as "Reserves" until a development plan is approved and production licence granted.
The net present value is calculated assuming a flat domestic Russian oil price in line with that currently (ca $58 per barrel) realised. It is Matra's opinion that incremental value may be achieved by exporting a portion of production once more significant volumes are produced.
Field Development
The process of applying for a Production Licence over the discovery area has begun. A reserve estimate was completed in accordance with Russian guidelines and submitted to the state authorities for approval. The estimate completed by a local Institute early in 2008 calculated recoverable reserves in the Russian category C1+C2 of 13.7 mmbbls on the basis of pre-2008 seismic, and data from the first well only. Formal approval of this estimate is expected shortly. Once the estimate is approved a field development plan will be submitted for approval.
Well A12 Production Testing
Pressure analysis of the well after the acid treatment showed that formation damage previously limiting the flow of the well has been removed by the treatment.
The well was returned to production after shut-in and gradually opened to a 6mm choke when the well flowed at 660bopd with a wellhead pressure of 735psi. After several days flowing on this choke size, the well was producing limited amounts of water (4-8%) and to safeguard the future of the well production was choked back to 4mm. The well has been controlled to flow at these reduced rates (250-320bopd) with a wellhead pressure of around 700psi and water cut of up to 20%.
The remapping of the Sokolovskoe discovery shows Well A12 to be on the flank of the structure. The source of the water production could be from the main oil-water-contact in the field or alternatively, from a slightly deeper horizon known to be a strong water producer. The well will be monitored whilst production continues and production logging will be considered for identifying the source of the water.
As the A12 well is on the flank of the structure, water production is not unexpected and there are no negative implications for the overall development of the field. Indeed pressure support from an aquifer could maintain productivity and improve recoverable volumes from the main field. Alternatively, if water is being channelled behind casing from a deeper horizon, this could be mechanically shut-off.
Forward Plan
Fulfilment of the obligations, under the Exploration Licence, requires Matra to drill two further wells before August 2009.
The revised mapping of the Sokolovskoe discovery and the exploration prospect in the south of the block requires approval for new drilling locations. Following receipt of this approval and the contracting of a drilling rig, Matra first intends to drill a crestal location on the Sokolovskoe discovery followed by a well on the southern structure.
Once the crestal Sokolovskoe well is completed, further appraisal production wells may be drilled according to Production Licence approval.
Peter Hind, Matra's Managing Director said:
"We are very pleased to be able to announce these resource estimates and particularly the indicative valuation of our discovery. The ongoing testing of Well A12 will provide further data for field development planning. The block contains further upside potential and we will concentrate on getting main production onstream as quickly as possible and further exploring the block. Our recent experience in Russia means we are well placed to take advantage of further opportunities in the region."
For the purposes of AIM Rule 11, this announcement has been reviewed by Matra's Managing Director, Peter Hind BSc, a Petroleum Engineer of more than 30 years' standing and a member of the SPE.
For further Information, please contact:
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Matra Petroleum |
www.matrapetroleum.com |
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Peter Hind |
+44 (0) 7990 807855 |
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Aquila Financial Limited (PR) |
www.aquila-financial.com |
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Peter Reilly |
+44 (0) 118 979 4100 |
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Matra's Nominated Adviser is RFC Corporate Finance Ltd |
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Steve Allen |
+61 8 9480 2500 |
Appendix
Glossary of terms used in Recoverable Contingent Resource Estimates
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“recoverable contingent resources”
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those quantities of petroleum estimated to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies. In the case of Sokolovskoe, the contingency is that the development plan is not yet approved and Production Licence not yet been awarded. Therefore Sokolovskoe may be characterized as “Development Pending, Contingent Resources”.
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“seismic”
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information derived from a geophysical method which involves generating shock waves by the release of energy at or near the surface and recording the nature of the waves returning from various subsurface rock interfaces
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“STBBL”
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stock tank barrels
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“mmbbls”
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million barrels
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“bopd”
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barrels of oil per day
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