The Company's test production project for the proven reservoir in the western section of the Kemerkol license area has been approved by the Kazakh Ministry of Energy and Natural Resources. This will extend the permitted production period from three months to three years for all wells drilled in this area, which currently includes Wells 20, 72 and 73.
Although, the marketing of all oil is still limited to the domestic market, the project also allows the Company to process its production before sale. This processing can increase the sale price by 10 – 15% and the majority of surface infrastructure is already in place.
The project will also permit production to recommence at Well 20, which was shut in to allow for work-over operations. The reactivation of this well will be coordinated with a feasibility study for the conversion of Well 45, also currently shut in, into a water re-injection well.
On the previously untested eastern section of the license area drilling has been completed at Well 62 and hydrocarbons were encountered at a depth between 367 – 370 meters. The interval will be completed and perforated for testing purposes, but the Company does not expect to encounter commercially viable volumes of hydrocarbons. The Company's mid-year production therefore, exclusive of affects of the testing program at Well 73, was 450 barrels of oil per day slightly less than its target of 500 barrels.
The next target, Well 72, has been spudded and completion is expected in the next 4 – 6 weeks. This well is located 300 meters north of Well 73 and will further appraise the proven reservoir in the western section of the license.
Tony Porter, CEO of Victoria Oil & Gas, said today, "The approval of our test production project for the western section of Kemerkol will lengthen the permitted sales period for our production and allow us to add significant value through in-house processing. As such, this is an important intermediary step before we can upgrade Kemerkol to a full production and export license.
Porter added, "We will continue to pursue our goal of increasing reserves through exploration of promising targets in the eastern part of the license block. Through Well 72 we aim to increase the yield from the proven structure in the west and bolster our cash flow, but we shall then return our attention to further exploration."
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