Following the success of drilling through over-pressured clays on the M11Z well with the Saipem rig and the Baker-Hughes oil based mud system, the Saipem drilling rig has now been mobilised to the Norio MK72 well and drilling operations have re-commenced. It is expected that drilling to the top of the prognosed target zone should take approximately one month.
On the Ninotsminda Field the N100H2 well is now ready to commence the horizontal kick-out when the Baker-Hughes directional drilling equipment which is now in the country arrives on site later this week. It is expected to take less than one month to drill the horizontal section on this well. Meanwhile CanArgo is in the process of rigging-up its UralMash drilling rig on the N97 well to commence the N97H horizontal well. The Baker-Hughes equipment will be mobilised to this well once the N100H2 well is completed.
In Kazakhstan, our Kyzyloy gas field development project and further exploration in the surrounding area is progressing well.
On the Kyzyloy Field two wells have been tested to date, namely the KZY105 and KYZ102 wells. Well KYZ105 was perforated and flowed gas at a rates of up to 50,000 cubic metres (1.77 million cubic feet) per day on an 8 mm (20/64 inch) choke, and is now shut in waiting for the installation of field development equipment. Well KYZ102 is currently flowing gas at a rate in excess of 120,000 cubic metres (4.24 million cubic feet) per day on a 20 mm (60/64 inch) choke. Five further wells are to be tested for the initial field development in which a 60 km (37.3 mile) pipeline is planned to tie the field to the main Bukhara-Urals gas trunkline. A long-term gas offtake agreement is currently under negotiation, with first gas expected in Q2 2006, with an initial plateau rate of 500,000 cubic metres (17.7 million cubic feet) per day. CanArgo also announced the execution of a Memorandum of Understanding covering co-operation in the gas sector in Kazakhstan with Gaz Impex S.A., one of the leading Kazakh based companies involved in gas marketing.
The Akkulkovsky exploration programme is continuing, with a further two year extension having now been agreed by the Expert Commission. Currently two of the five planned wells have reached total depth (AKK03 and AKK05), and the third (AKK04) is currently drilling towards the target reservoir. In both AKK03 and AKK05 wireline logs indicate the presence of gas bearing sands in the well. Both wells are cased and await testing as part of a co-ordinated testing programme including the Kyzyloy Field development wells. This co-ordinated approach is both cost-effective and assists in logistics operating in this area, and the first test on these wells is planned within the next 10 days.
In addition CanArgo's Kazakh subsidiary BN Munai LLP has signed with the Minister of Energy and Mineral Resources of Kazakhstan, the Parliament of Kazakhstan, and in conjunction with the major operating companies in Kazakhstan a Memorandum of Understanding on Extractive Industries Transparency Initiative.
CanArgo is an independent oil and gas exploration and production company with its oil and gas operations currently located in the Republic of Georgia and in Kazakhstan.
The matters discussed in this press release include
forward-looking statements, which are subject to various risks,
uncertainties and other factors that could cause actual results to
differ materially from the results anticipated in such
forward-looking statements. Such risks, uncertainties and other
factors include the uncertainties inherent in oil and gas development
and production activities, the effect of actions by third parties
including government officials, fluctuations in world oil prices and
other risks detailed in the Company's reports on Forms 10-K and 10-Q
filed with the Securities and Exchange Commission. The
forward-looking statements are intended to help shareholders and
others assess the Company's business prospects and should be
considered together with all information available. They are made in
reliance upon the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company cannot give assurance
that the results will be attained.
CanArgo Energy Corporation Julian Hammond Investor Relations Manager +44 7740 576 139 Fax: +44 1481 729 982 Email: firstname.lastname@example.org or Gambit H&K AS - NORWAY Regina Jarstein + 47 95213451 or CEOcast.com - USA Michael Wachs +1 212 732 4300
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