Since the drilling update published by Timan Oil and Gas plc ("Timan" or the "Company") on 19 February 2007 ("February Update"), the Company has completed the drilling of the 21 production and 4 water injection wells as part of its Pi lot Project at the NGPT Field (as both terms are defined in the February Update). The wells were drilled to a planned depth of 115 meters and penetrated the oil bearing sandstones of Reservoir I (as defined in the February Update).
Timan has run production tubing, cemented and perforated all the wells. At present, 22 wells of the NGPT Pilot Project have been flow tested for hydrodynamic data and evaluation of oil properties. All wells have been equipped with pumps and the majority are now on continuous production. The wells that are producing show flow rates of up to 20 barrels per day in a natural depletion regime.
The average production from the Pilot Project area was 70-75 barrels per day for the first 2 weeks of April, which is the anticipated scenario prior to water injection. Oil produced is transported to the Transneft oil metering station. Water injection on the Pilot Project will commence at the end of April. Two additional production wells are being drilled as part of the full development of the NGPT Field and 11 more well pads are being prepared in the area adjacent to the Pilot Project area.
Timan has also commenced the drilling of exploration well No 41 in the southern part of the NGPT Field. This well targets a new prospective horizon at a depth of around 160 meters.
An onsite oil treatment plant with a capacity of 3,100 barrels per day is currently under construction.
With regards to the outstanding license matter summarized in the Company's announcement of 23 February the Board is happy to note that to date there has been no negative impact on the company's operations and none of the state authorities has initiated any revocation proceedings. Timan and the Board remain confident that a satisfactory outcome will be reached.
In March 2007, Timan commenced drilling a new appraisal well (well No 22) to a planned depth of 1200 meters targeting oil in the Permian Carboniferous Section. The drilling is expected to be completed in June 2007. Steam injection, using the "huff'n'puff" technique on well No 21 (which was drilled in 2006) is starting later this week.
In order to calculate the resources of Izberbash Block No 2 (as defined in the admission document of 22 December 2006) Russian independent consultant Neftegazconsult has provided further interpretation of seismic data and evaluated resources applying risk factors. This information will be audited by Miller and Lents Ltd who will then develop a final Competent Persons Report which will include prospect risk assessments. Neftegazconsult believes that these results will show drillable prospects.
The seismic program on Sulak Block No 4 (as defined in the admission document of 22 December 2006) is progressing as planned with the current aim to collect 650 kms of 2D seismic data. The data will be evaluated with the intention of developing a portfolio of prospects on Sulak Block No 4 by the end of 2007.
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