CIOC's Kor-Tazh subsidiary has a 100% interest in the 22-square kilometer oil field, where previous exploration activities were conducted in the 1970s. Kor-Tazh also serves as operator of the field. In 2004, the Government of Kazakhstan awarded Kor-Tazh concession rights to the field, which include a 5-year term for exploration activities and a 20-year term for production. The oil at the North-West Zhetybai field is a light, sweet crude, similar to Brent crude. Existing infrastructure near the field includes pipelines, roads and rail lines. The North-West Zhetybai field, which has proved oil reserves, will require development work in order to produce the reserves.
"We are very pleased to receive approval from the Technical Council on our 2007 work plan for the North-West Zhetybai field," said James. E. Knight, President and CEO of CIOC. "Our Dank subsidiary, which provides seismic surveys and other oil field services to the petroleum industry in Kazakhstan and elsewhere, is performing a new 3-D seismic survey of the field. Following Dank's data processing and interpretation work, we will be able to determine the location of appraisal wells. We plan to drill a new 3,500 meter appraisal well that will enable us to further define and delineate the field using advanced technologies and drilling techniques. As part of the 2007 work program, Kor-Tazh will continue to work on re-entering previously drilled wells. We expect to construct facilities, such as the camp base, an oil production facility and access roads, in support of our field development work."
In May 2007, Kor-Tazh secured a $5 million bank line of credit for its development activities on the oil field. CIOC plans to seek additional funding for its field development program.
In a reserve report prepared by Ryder Scott in 2006, the North-West Zhetybai field was estimated to have 56 million barrels of oil in place, which confirmed the reserve estimate made by the Kazakh Institute on the basis of previously drilled wells. Ryder Scott estimated that the oil field has 2.16 million barrels of proved, undeveloped reserves and 4.53 million barrels of probable, undeveloped reserves. In CIOC's 2006 10-KSB filing, the future net cash flows for the 2.16 million barrels of proved, undeveloped reserves were valued at $17.9 million, following SEC guidelines and utilizing a discount of 10% per annum.
Headquartered in Houston, CIOC acquired its current operations in August 2006 with the merger of several Kazakhstan companies, principally Dank and Kor-Tazh. Dank and PGD Services (a subsidiary of Dank) provide oil field services including 2-D and 3-D seismic acquisitions, data processing and interpretation, reservoir modeling and topography to the petroleum industry in Kazakhstan and elsewhere in Central Asia. Kor-Tazh operates an oil field in Western Kazakhstan.
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