1 December 2009
AIM: XTR
XTRACT ENERGY PLC
("Xtract" or the "Company")
Operations Update - Extrem Energy AS
Xtract Energy Plc ("Xtract") is pleased to provide the following
update on operations in the Alasehir license area at its Turkish
associate company Extrem Energy AS ("Extrem").
Sarikiz-2 Production
Following completion of the Alasehir-1 re-entry project, the drilling
rig was mobilized to the Sarikiz-2 site and began a work-over
sequence on 25 November 2009 ready for the start of production. The
work-over was completed on 30 November 2009. During the work-over,
samples of oil and water were taken for the refinery and municipality
respectively and the "Christmas Tree" was installed at the surface,
ready for production.
Work on the surface facilities and on the logistical, permitting and
commercial arrangements for production is substantially complete. The
remaining item required to commence production is a well-site heating
system to maintain the condition of the produced crude oil which is
expected to be of waxy composition. The heating system is expected to
be installed in the next few days enabling natural flow to be
established.
Early production will be received by the refinery at Izmir using
temporary delivery arrangements agreed with them. A joint project
with the refinery operator is under way to build the necessary
infrastructure there to receive larger volumes as the Sarikiz field
is progressively brought on stream. It is now expected that full
pumped volumes from Sarikiz-2 will be produced and delivered by the
end of Q1 2010. Until then, production is expected to be based on
natural flow.
Further information on the actual natural flow rate achieved and a
revised projected pumped rate will be supplied once flow has been
stabilized.
Sarikiz-3 Drilling
Preparation for the drilling of new well Sarikiz-3 is ongoing. The
land has been acquired and taken over and clearance of the existing
vineyard is in progress. Preparation of the concrete base for the
drilling rig will follow, ready for a spud date before the end of
December 2009. The drilling contractor is Merty Energy Inc.
The Sarikiz-3 prospect is located 525m to the east of Sarikiz-2 well
at the junction of two intersecting 2-D seismic lines. The proposed
total depth is 1950m. The targeted Alasehir sandstones are expected
to be encountered at depths between 1570m and 1850m. Depending upon
hydrocarbon shows and the results of wire line log analysis, 7 inch
casing will be run from the surface to below the target zones and
cased-hole production testing will be carried out. The well cost is
estimated to be approximately US$3.5m and the drilling programme is
planned on the basis of 45 rig days.
Based on a 2 square km area and an assumed net productive pay
thickness of 20m, Extrem Energy's preliminary pre-drill P50 estimate
of the recoverable oil in place from the Sarikiz-3 well is 5.75mbbl,
based on an assumed 20% recovery factor.
Extrem holds 80% of the relevant license. Xtract holds 34% of Extrem.
Alasehir/Sarikiz Field Development
The actual flow rate achieved during the extended test at Sarikiz-2
and the drilling results from Sarikiz-3 will do much to confirm the
potential of the Sarikiz oil field.
In view of the high level of uncertainty over the possible extent of
the oil-bearing structures in the wider Alasehir license area and in
order to enhance planning of further wells after Sarikiz-3, Extrem is
evaluating a project to undertake 3-D seismic over the license area.
An update will be provided once a decision on the project has been
reached.
Commenting on the developments, Andy Morrison, Chief Executive of
Xtract said, "We are pleased to note the progress that is being made
by Extrem. Each milestone passed is a first time for the company. The
previous disappointment at Alasehir-1 reminded us not to take
anything for granted in the oil exploration business, but investment
prospects continue to look attractive at Alasehir and across the
Extrem portfolio."
The information above relating to resource estimates has been
provided using the SPE standards and includes the following terms:
"mbbl" (million barrels); "P50" (mid-case scenario in relation to
reserve expectations).
The above information has been reviewed and approved by Ongun
Yoldemir, Managing Director of Extrem Energy, who has a masters
degree in geological engineering and worked as an explorationist in
the oil and gas sector in the Middle East, Kazakhstan, Azerbaijan,
and North Sea, has over 28 years' experience in the resource and
energy sector and is a member of the American Association of
Petroleum Geologists, European Association of Geologists and
Engineers, the Society of Exploration Geophysicists and several
related Turkish institutions.
Enquiries please contact:
Xtract Energy Andy Morrison, CEO +44 (0)20 3205 1148
Smith & Williamson David Jones +44 (0)20 7131 4000
Corporate Finance Azhic Basirov
Barrie Newton
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
34% 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 36.8% 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 and Pishkoran exploration
licences in the Kyrgyz Republic. Xtract has entered a farm-out
agreement to fund a seismic and drilling programme for 2008-09.
Xtract owns 25.0% of the issued share capital of Zhibek Resources.
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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