In response to these share price movements, the Company provides the following drilling update.
The Al Jariya-1 well, which is expected to drill to a total depth (TD) of approximately 5,900 meters, has reached a depth of 4,650 meters and 9 5/8-inch casing has been run and cemented to approximately 4,600 meters.
Although the well has encountered few mechanical or technical problems since the running of an 11 3/4-inch liner at approximately 2,600 meters, drilling progress has been slowed by the presence of extensive chert bearing intervals within the Upper Cretaceous shales of the Upper Fiqa Formation. In addition, the running of the 11 3/4-inch liner has required that the hole be opened progressively to 10 5/8-inch or 12 1/4-inch to allow the running of the 9 5/8-inch casing string to the present depth.
In all regards, the geological aspects of the well remain consistent with the pre-drill prognosis. However, the estimated total cost of the well has increased in proportion to the number of days taken to drill it and the current estimate is that the cost through total depth logging will be $50.5 million ($25.25 million Indago's share). Testing, if required, will be additional to this amount. Current estimates suggest the well should be at total depth before mid-February 2008 and, if testing is required, this should be complete by mid-April.
Although the delays as outlined above have substantially increased Indago's investment in the well, the additional funding requirement has not compromised the Company's ability to complete its current committed exploration program.
Once operations at the Al Jariya-1 well have been concluded, drilling will commence on the next well in the program: the Zad well on the Adam prospect in Block 47, provisionally scheduled to start in the second quarter of 2008.
"Although progress on this difficult well has been much slower than we had hoped, the setting of the 9 5/8" casing is an important milestone which greatly increases the chance that we will successfully reach the objective Cretaceous carbonates," said David Bremner, CEO.
Indago holds an approximate 50% interest in Block 31. The Operator, RAK Petroleum PCL, holds the balance of the interest.
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