The fourth East Tegen well, designated East Tegen-3, is located due west of East Tegen-2 and is expected to encounter oil in the same zones. Further drilling locations have been identified at shallower levels (Albian Sand) in a separate fault block on the eastern flank of the East Tegen Field.
The Company has also commenced a work-over program on the East Tegen wells. East Tegen-2 well has been re-entered and a second zone has been perforated at a depth of approximately 410 meters. This zone is currently being tested and, contingent upon test results will be put on pump production and may be produced simultaneously with the upper zone. The upper zone, which has been producing test oil in the first two East Tegen wells, is at approximately 370 meters.
After re-completing East Tegen-2, the Company plans to re-enter East Tegen-1 to clean-up the well bore over the 372 meter zone. Contingent on results, the well may also be re-perforated over this interval. In addition, if the test of the 410 meter zone in East Tegen 2 produces good results, the same zone may be perforated in East Tegen 1.
The Company's third well in the Liman Block, designated East Tegen-5, tested minor volumes of oil and gas but mainly water, indicating that this well penetrated the oil-water contact in the upper zone. Depending upon the results of the testing of the lower zone in the East Tegen-2 well, Aurado may re-enter East Tegen-5 and test the lower zone within this well.
Furthermore, Aurado reports that it has completed a private placement of US$900,000 convertible debenture units as well as a private placement of $800,000 of share and warrant units. The convertible debentures units consist of 3-year 8% debentures convertible into shares at $0.20 with 5-year warrants convertible at $0.20 into 50% of the number of shares that the debentures are convertible into. The share and warrant units consisting of 1 share at $0.16 plus 1/2 of a 5-year warrant, with one whole warrant exercisable into 1 share at $0.20. A finder's fee is payable on the private placements. The net proceeds have been added to general working capital.
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