DRILLING THE LAST WELL ON PAD 1.
SAGA has completed the last well (# 104) on Pad 1 to a targeted depth of 2175 meters. Well # 104 was the first well where SAGA could apply a complete new concept of well design and drilling, comprising:
--New type of well trajectory for vertical penetration of production zones after desired deviation. --New modern type of drilling fluid and fluid management. --Newly upgraded rig and equipment to meet western standard of performance. --Proven new method of 1 stage cementing of the production casing using patented new cement additive to reduce hydrostatic pressure and improve bonding between casing and rock strata.
MAIN ACHIEVEMENTS OF WELL #104
--The well was completed with a new record of only 32 days drilling time compared to previous 48 days and closer to the target of US $1 million drilling cost per well. --The well logging did for the first time give 100% reliable information about all the well parameters. --The coring of the lower Ardatovsky formation yielded a record recovery of 120% of cored strata without washout of the sandstone --The new and more accurate drilling, logging and core data are now being used in finalizing the 3D seismic, placement of new wells and assessment of resources. --Well # 104 has also been a success in correct placement, as all the three main production layers has been penetrated through a thicker part of the reservoirs. The three reservoirs should therefore yield a good production capacity.
SPUDDING OF WELL # 120 ON THE NEW PAD 3.
SAGA spudded the new well # 120 on PAD 3 on June 24th using a modern modular based electric drilling rig. This well is classified as an exploration well and will be part of the ongoing assessment of the East Shaltinsky resources. The well design will however allow for reclassifying of all the wells, on PAD 3 from exploration to production wells when the drilling on PAD 3 has been completed later this year.
DRILLING START ON THE SOUTHERN PETROVSKY FIELD
SAGA concluded a new contract that covers drilling of 6 new wells on the Petrovsky oil field in the Rodnikovsky license. The drilling is to commence as soon as the rig has been re-located from Pad 1 to the new Pad 4. The target is to open up and confirm all extractable resources on the Petrovsky oil field where SAGA currently has an estimated extractable P2 reserve of 6.2 Mboe, based on the old exploration and 2D data. The new 3D data, and the last well (#104) on Pad 1, East Shaltinsky, has enabled SAGA to pinpoint the location for the new Petrovsky well placement.
Malvin Hoeydal, President and CEO of SAGA Oil ASA comments: "We are very proud to be able to announce the good operational news so soon after successfully concluding the private placement of NOK 180 mill. This last private placement brings SAGA Oil close to being fully financed for the entire 40 well development that will yield a daily production rate of between 10 000 and 14 000 BOE by year 2009.
The successful completion of the well # 104 is a new milestone for SAGA as it has proven that its Russian subsidiary PROMGEOTEK has developed into becoming a professional oil field developer. SAGA has by this proven its capability of achieving its strategic defined goals in record time by using the right approach for the Russian market conditions.
Well #104 has been very rewarding and encouraging for both SAGA and its subcontractors, as "seeing is truly believing", in drilling for oil and gas. Retrieving core samples from a depth of 2100 meters that are dripping of oil, and splitting the sandstone core to see it is fully saturated with light oil, still gives the best motivation. We expect to be able to keep the new high quality results for all our coming wells after such encouraging achievements. Our Russian employees and subcontractors have really shown an outstanding ability to adapt to new systems and technologies, and most of all, actively contribute to achieving the best possible result."
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