The ZMA-2X is the second of five wells that Max Petroleum plans to drill on the Zhana Makat A structure in its E Block. The well was drilled down-dip from the ZMA-1X discovery well in order to further delineate the field and has encountered 18 meters of oil column, exceeding the Company's initial expectations for the well.
Similarly to its first well, the Company intends to gradually increase the production rate of the ZMA-2X to ensure that there is no reservoir damage. The well is in the process of being cleaned up, and an announcement about production volumes will be made when initial testing of the well has been completed.
The Company also began drilling its ZMA-4X well today, which will be followed shortly thereafter by the ZMA-3X and ZMA-5X. The three additional wells are located further up-dip on the Zhana Makat A structure, where the Company believes the oil column thickness may exceed that seen in the flank areas drilled by the ZMA-1X and ZMA–2X wells.
The ZMA-1X discovery well is now producing 225 barrels of crude oil per day ("bopd"), an increase of 45 bopd over its initial rate announced on September 14, 2006. The Company is continuing to evaluate the well in order to optimize its production rate.
Oil produced to date has been sold into the local market as unprocessed crude at a netback price to the wellhead of US$27 per barrel. The Company anticipates that processing at the nearby East Makat facility under its previously announced co-operation agreement with KazMunaiGas Exploration & Production will commence before year-end, significantly increasing the netback price per barrel received by the Company.
The Company's stock tank oil initially in place and recoverable reserves in the Zhana Makat A structure are expected to be certified by the Company's independent advisors, McDaniel & Associates, in the course of the fourth quarter of 2006 following the completion of the initial drilling program on Zhana Makat A, which is expected to last until mid November.
Jim Jeffs, Executive Chairman, commented:
Max Petroleum intends to drill up to 30 shallow wells by the end of next year. We are also pursuing our higher impact intermediate and deep drilling programs and intend to drill six intermediate and 3 deep wells during the same period.
We believe the Company's knowledge of the downstream sector in Kazakhstan will provide us with much better production economics once we move into the export market."
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