China Energy Awards Drilling Contract for its Morskoe Field



China Energy Ventures Corp.'s subsidiary, KoZhaN LLP, has awarded a turn-key drilling contract to Precaspiburneft-Kazakhstan LLP, to drill one well (Well #10), followed by two optional wells in its Morskoe field, located on the eastern shore of the Caspian Sea in western Kazakhstan.

Well #10, the proposed infill location, will be drilled to a depth of 1300m, off-setting an existing capped oil well (Well #6) which was drilled in 1965. This well will be drilled 200m from the Well #6 surface location in what is believed to be an updip position.

Well #6 encountered two oil-bearing (25 degreesAPI) sandstone formations; the Albian and the Aptian (1178m to 1182m and 1255m to 1265m respectively).

The Albian formation flowed on test at a rate of 912 bopd on a 9mm choke with no water production, and at a gas/oil ratio of 125 scf/stb for a period of three days. The initial bottom-hole reservoir pressure of 1860 psia was achieved after five days of shut-in following the test, suggesting no depletion.

The Aptian formation flowed oil on test at a rate of 295 bopd on a 9mm choke with no water production and a gas/oil ratio 158 scf/stb for a period of three days. The initial bottom-hole reservoir pressure of 2432 psia was achieved after 20 days of shut-in, indicating no depletion. The Company has cancelled its farm-out agreement with the Shengli Oilfield due to lack of performance, and has now entered into a Letter of Intent with BT Oil LLP, a local construction company. Under this farm-out agreement, BT Oil will complete all road and lease construction, and pay for the drilling of Well #10. In return, it will receive a 45% interest in the Morskoe field. Well #10 is anticipated to be spud by mid-September following the completion of lease construction. Due to adverse weather conditions, an earlier expected spud date was not possible.
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