The Mak A1-X well was successfully drilled to a total depth of 1,000 meters (m) and a 23m oil column was encountered in sands from a depth of 812m to the oil-water contact at 835m.
The well has been successfully completed and, while it is currently in the clean up phase, it is producing approximately 200 barrels of liquid per day with an average base, sediment and water ratio ("BS&W") of 10%, giving a current oil production rate of 180 barrels of oil per day ("bopd"). As the well cleans up over the next few days, the BS&W is expected to decrease (there is no indication of formation water) and the pump speed will gradually be increased to its maximum rate. The oil is a high quality 35 API gravity crude, which is similar to analogous production from the area. The Company is continuing to evaluate the well and is conducting additional flow tests in order to optimize its daily production rate.
Separately, Max Petroleum has initiated construction of a temporary production facility in order to process the production from the current well, as well as future wells on the same structure. Oil lifting and sales contracts for the Company's early production are being negotiated and finalized. Near Term Shallow Well Program
Zhana Makat A
Max Petroleum commenced drilling a second well into the same structure this week, and will drill additional wells to further define the size of the Zhana Makat A structure and fast-track early production. Following the interpretation of the 3D seismic data acquired by the Company, Max Petroleum estimates the areal extent of the Zhana Makat A reservoir to be a minimum of 2.5 square kilometers.
Following the completion of the initial drilling program, which is expected to last through mid-November 2006, the Company's stock tank oil initially in place ("STOIIP") and mean recoverable reserves in the Zhana Makat A structure will be certified by the Company's independent advisors, McDaniel & Associates.
Zhana Makat E and Zhana Makat D
Max Petroleum also announces today that it has identified two other prospects in the Zhana Makat area of Block E:
Zhana Makat E, which based on our estimates appears to have an areal extent of 1.5 square kilometers and is likely to be hydrocarbon bearing from a depth of 815m. We expect that Zhana Makat E will be drilled later this year following the completion of the additional wells within the Zhana Makat A structure.
Zhana Makat D, which based on our estimates appears to have an areal extent of 3.5 square kilometers and is likely to be hydrocarbon bearing from a depth of 1,320m.
Jim Jeffs, Executive Chairman, commented:
"The 23 meters of net oil pay encountered in the first well into the first of numerous structures in the Company's acreage is very encouraging and serves to validate our geological thesis, field development plan and overall asset prospectivity. It is also a testament to the quality of our staff on the ground in Kazakhstan.
The start of production from our large and promising asset base marks an important milestone. As envisaged, Max Petroleum will now diligently pursue short-term reserves to drive production growth while preparing for high impact deep exploration wells.
With in excess of 50 shallow leads, numerous intermediate and deep leads and prospects, and under the operational leadership of our highly capable and qualified staff, Max Petroleum is well positioned for future growth."
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