14th Apr 2008 07:00
Max Petroleum PLC14 April 2008 Max Petroleum Plc Strategic and Operational Update 14 April 2008 Max Petroleum Plc (the "Company") today announced its strategic plan outliningits corporate strategy for the three-year period ended 31 December 2010 (the"Strategic Plan"), as well as an operational update of the Company's activitiesthrough the quarter ended 31 March 2008. Three-Year Strategic Plan The Strategic Plan was prepared by Management and approved by the Company'sBoard of Directors after an extensive review of the Company's assets, operationsand personnel by Mark Johnson, the Company's Chief Executive Officer. Theprincipal goal of the Strategic Plan is to maximise the value generated from theCompany's capital spending programme over the next three to five years byproperly leveraging off of the Company's extensive 3D and 2D seismic and othergeological data acquired on its exploration acreage in the Pre-Caspian Basin. Over the next three years, the Company expects to drill a total of 57 onshorewells, evaluating 26 structures in Blocks A&E and Astrakhanskiy. The explorationdrilling programme will test currently identified shallow, intermediate and deepstructures with estimated risked mean resource potential of 829 million barrelsof oil equivalent ("Mmboe"). The Company's ongoing geological and geophysical("G&G") exploration programme will acquire, process and interpret in excess of5,000 km2 of 3D seismic and 2,700 km 2D seismic over three blocks, of whichapproximately 3,400 km2 of 3D and 2,100 km of 2D seismic data has already beenacquired with up to four seismic crews working simultaneously. The Company plansto use up to six drilling rigs through 2010, including five rigs dedicated toBlocks A&E and one deep rig dedicated to Astrakhanskiy. G&G Programme The Company plans to complete its 3D seismic acquisition programme by the end of2008, consisting of the following 3D seismic surveys: €380 km2 in the western section of the Astrakhanskiy license area (completed February 2008) €1,940 km2 in the northern section of Block A (84% complete) €1,610 km2 in the southern section of Block E (47% complete) €700 km2 in the northeast section of Block E (planned 4Q 2008) The Company is currently processing the seismic data from the Astrakhanskiy 3Dsurvey and partial sections of data from the two larger shoots on Blocks A&E -all of which should be available for interpretation beginning in May 2008. Theremaining 3D data resulting from the Company's surveys in Blocks A&E will beavailable for interpretation in early 2009. In order to accelerate theevaluation of the Company's exploration acreage given the large volume of 3Dseismic and other technical data, the Company's Board of Directors has approvedthe establishment of a separate exploration team in Houston, Texas, which willwork with the Company's existing team in Almaty to high grade the Company'sexpansive portfolio of leads and prospects and prioritise future drillingschedules. Drilling Programme The Company plans to expand its exploration drilling activities significantlybeginning in 2009, with a goal to substantially evaluate the Company'sprospective acreage position over the next three years. The Company has tendered for two intermediate rigs to drill exploration andappraisal wells on Blocks A&E up to depths of 3,000 metres and plans to have therigs on location on or before January 2009, providing additional time for theCompany to complete its seismic acquisition programme and perform a qualityreview of the resulting data. The intermediate rigs will be dedicated todrilling 22 shallow and intermediate structures in Blocks A&E with risked meanresources of 191 Mmboe, as well as up to three horizontal development wells inthe Zhana Makat area. Following successful appraisal efforts, the Companyintends to mobilise a third intermediate rig dedicated to drilling appraisal anddevelopment wells. Additionally, the Company plans to release the KM-200 shallowrig after it has completed drilling the wells planned for 2008 in the ZhanaMakat area. The Strategic Plan calls for four deep structures to be drilled through 2010 inBlock E and Astrakhanskiy with risked mean resources of 638 Mmboe. The firstexploration well in Astrakhanskiy is scheduled to begin drilling in December2008 to be followed by an appraisal well if it is successful or a secondexploration well. Management has established a dedicated Astrakhanskiy projectteam, which is preparing a tender for the rig as well as handling the variouspermitting and other regulatory issues involved with drilling the initial well.With regards to Block E, the timing of the initial deep well is dependent uponthe processing and interpretation of the ongoing 3D seismic survey in thesouthern portion of the block. Consequently, it is anticipated that the initialdeep exploration well will begin drilling in late 2009 or early 2010, followedby drilling of a second deep well in 2010. Total budgeted capital expenditures for the three-year period are between $300to $400 million, which is expected to be funded using operating cash flow, theCompany's existing credit facility with Macquarie Bank Limited, anticipatedfarmout or other joint venture arrangements, and other forms of debt or equityfinancing as required. Operations Update The Company has drilled a total of 25 shallow wells on Block E to date,including 19 successful wells in the Zhana Makat area and six dry holes. Duringthe latest quarter, the Company drilled four successful wells, including astep-out well in the E prospect and three additional in-field producers. MaxPetroleum also drilled a dry exploration well in the Zhana Makat D prospect. TheCompany intends to drill an additional development well in the Zhana Makat fieldprior to releasing the shallow drilling rig. During the quarter ended 31 March 2008, the Company experienced various facilityconstraints relating to water treatment and desalting of its crude oilproduction. The Company has taken steps to resolve these issues, includinginstalling water treatment facilities in January 2008 and desalting facilitiesin February 2008. While the Company is not yet in a position to fully processits crude oil, the facility improvements allowed the Company to achieve averageproduction in March 2008 of 2,700 barrels of oil per day ("bopd") and itshighest daily production total of 3,344 bopd on 4 April 2008. Mark Johnson, CEO, commented: "Max Petroleum's Strategic Plan reflects an intensive and detailed review of theCompany's assets and capabilities since I joined in January. I have had theopportunity to assess the organisation and believe we have a strong managementand operational team in place which is critical for us to achieve our businessobjectives. As a result, I am confident that we have set realistic andachievable goals for the next three years that will generate significant valuefor the Company's shareholders by proving up reserves. The next three years are a pivotal period for the Company. I look forward totaking Max Petroleum to the next level by proving the potential that we believewe have in the ground in Kazakhstan, a country that is one of the most excitingplaces to be in the oil industry." Enquiries: Mark Johnson, Chief Executive Officer Tel: 020 7355 9590Michael Young, Chief Financial OfficerPeter Moss, Investor Relations ManagerMax Petroleum Plc Tom Randell / Anca Spiridon Tel: 020 7653 6620Merlin PR Daniel Bate / David Youngman Tel: 0161 832 2174WH Ireland Ltd Donald Dorn-Lopez, Petroleum Engineering and Geology Manager, is the qualifiedperson that has reviewed and approved the technical information contained inthis announcement. Mr. Dorn-Lopez, a senior geophysicist with over 27 years ofexperience, is a member of the Society of Exploration Geophysicists, theEuropean Association of Geoscientists and Engineers, the Society of PetroleumEngineers, and the American Association of Petroleum Geologists. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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