Gas2Grid Prepares for Extended Production Test at Malolos-1 Well in Cebu

Gas2Grid Limited reported Friday on the status of the Malolos-1 extended oil production test operations aiming to confirm the commerciality of the Malolos Oil Field in Cebu in the Philippines.

The selected small crew has been mobilized to the site during the week to prepare Rig-2 for the operations. Early next week the well clean-out will commence and the swabbing unit will arrive to be readied to swab liquids for a period of about 2 weeks from the well and produced from one of the two oil bearing sandstone. This extended oil production test will be followed by a shut-in period to assess the reservoir pressure build-up.

Each of the two oil bearing sandstones at depths of 7,280 – 7,308 feet (2,219 – 2,227.5 meters) and 7,152 – 7,207 feet (2,178 – 2,195.4 metres) will be individually placed on this extended pump test followed by a shut-in period. Oil was produced on short term test in June Quarter 2013 at indicative production rates of between 100 to 200 barrels of oil per day (bopd) from the upper sandstone section. Oil from the lower sandstone also flowed to just below surface.

The extended oil production testing program aims to gather sufficient technical information to confirm commerciality of the Malolos Oil Field to justify the Department of Energy awarding a 25 year production period leading to full field appraisal and development. Proving commercial production at Malolos Oil Field will have a very significant impact on the value of the Company and will benefit the Philippine economy.

Oil produced from the extended oil production test will be sold in Cebu as a fuel source providing working capital.

On Jan. 29, the Company reported a “Contingent Resource” of oil in the two productive sandstones for the Malolos Oil Field between a “Low Estimate” (1C) of 6.8 million barrels and a “High Estimate” (3C) of 68.1 million barrels, with a “Best Estimate” (2C) of 20.4 million barrels of “Total Oil Initially in Place”. This Contingent Resource is in addition to the Unrisked Prospective Resources released to the ASX Jan. 29.

The “Unrisked Prospective Resource”* (in accordance with Clause 7.3 of ASX Guidance Note 32) calculates recoverable oil in the range from a Low Estimate of 14 million barrels to a High Estimate of 601 million barrels with a Best Estimate of 104 million barrels within Service Contract 44, located onshore Cebu in the Philippines.