Nelson Resources Sees Increase in Kazakhstan Production

Nelson Resources' share of gross production averaged 19,444 barrels of oil per day (bopd) for third quarter 2004 (Q2: 15,500 bopd / Q3 2003: 9,830 bopd), a year-on-year increase of 98% and a quarter-on-quarter increase of 25% on its four oil fields located in Kazakhstan.

  • Kazakhoil Aktobe (KOA) comprises two fields, Alibekmola and Kozhasai, and is located in the Aktiubinsk Oblast, south of the city of Aktiubinsk. The Kozhasai field is located 280 km south of Aktiubinsk and is 40 km south west of Alibekmola. KOA is 50% owned by Nelson.
  • Q3 production averaged 23,600 bopd compared to 17,880 for Q2 2004, a 32% increase quarter-on-quarter.
  • Combined production from KOA's two fields has maintained levels consistently over 20,000 bopd since June 1, 2004
  • Peak production reached over 25,000 bopd in late September
  • North Buzachi oil field is located in the Mangistau Oblast of western Kazakhstan, approximately 180 kilometers north of the Caspian Sea port of Aktau. Nelson retains a 50% interest.
  • Q3 production increased to 9,320 bopd compared to 7,320 bopd for Q2 2004, a 27% increase quarter-on-quarter.
  • Karakuduk oil field is located 340 kilometres north east of Aktau. Nelson owns a net 36% interest in Karakuduk via its 60% shareholding in Chaparral Resources Inc.
  • Q3 estimated production was 8,290 bopd compared to 7,956 bopd for Q2 2004, a 4% increase. Karakudukmunai JSC, the operator of the field, is pursuing a program of additional drilling, artificial lift, waterflood and workover operations to add new producing wells and to stimulate future production from existing wells.

  • Nelson President, Baltabek Kuandykov, commented, "Nelson Resources continues one of the Caspian region's most ambitious field development programs. We have four drilling rigs and two workover rigs operating in KOA, with a fifth rig being set up on a new location in the Kozhasai field. KOA's operating wells have doubled this year from 14 to 29. In North Buzachi, we have moved quickly to act on the approval of an expanded work program for the field and have two drilling rigs and three workover rigs working there. Karakudukmunai has one drilling rig and one workover rig operating. These development programs are resulting in solid increases in production for the company."

    At the end of September 2004, KOA had 28 producing and one injection well, North Buzachi had 40 producing and 2 injections wells, and Karakudukmunai had 47 producing and 6 injection wells in operation. Construction work is in process on additional processing facilities at both Alibekmola and North Buzachi fields to handle increased levels of production.

    Nick Zana, Chairman and CEO of Nelson Resources, stated, "I am very pleased by our strong operational progress. We are also in a period of very high oil prices that has enabled us to conduct substantial development programs with low reliance on external financing. With the proceeds of the equity offering and admission to London's Alternative Investment Market completed in July of this year, Nelson is in a strong position to pursue its vision for continued growth and expansion."

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