Daily oil production reached new record levels of 40,500 barrels per day by the end of the fourth quarter 2007. Total fourth quarter oil production increased by 27% to 3,130,588 barrels (2,472,980 barrels) and the average daily production for the quarter increased to 34,028 barrels per day (26,880 barrels per day). Total oil production for 2007 increased by 33% to 10,637,650 barrels (8,010,855 barrels). For 2008, total oil production is projected to increase to 15 million barrels.
Oil production was established at the Kolvinskoye field in the Timano Pechora region in accordance with license obligations.
Average gross oil prices received in the fourth quarter 2007 increased to approximately USD 54 per barrel from USD 46 received in the third quarter 2007. The increase in gross prices resulted in average fourth quarter netbacks, after transportation costs, preliminarily improving to USD 39.40 per barrel from USD 33.55 in the third quarter.
Total oil production in the Tomsk region for the fourth quarter 2007 was 1,032,694 bbl (818,635 bbl).
Timano-Pechora region Total Timano-Pechora region oil production for the fourth quarter 2007 increased to 1,139,620 bbl (714,505 bbl).
A new geological model of the Lek Kharyaga field was created following the interpretation of 70 km2 of 3D seismic data. 2 new wells were drilled and completed in the field with higher than expected flow rates of 1,500-1,700 barrels per day. The flow rate from well number 415 more than doubled to 1,600 barrels per day after the installation of a higher capacity electronic submersible pump. An 8.3 kilometer winter road was constructed to the field.
At the North Kharyaga field, the interpretation of a 120 km2 3D seismic study was completed and a new geological model of the reservoir was created. 3 new producing wells were drilled and 4 wells were put into operation in the field. In order to improve flow rates from new wells that have been underperforming, studies have been initiated to determine appropriate technology for formation opening and choice of drilling mud.
Volga-Urals region Total Volga-Urals oil production for the third quarter amounted to 958,274 bbl (939,840 bbl).
The upgrade of the Kochevnenskoye field’s oil treatment facility was completed increasing capacity to 10,800 barrels per day. This allowed production to start from the previously drilled wells number 111 and 112. Well number 2 was sidetracked and will be put on production in January 2008.At the Novo Kievskoye oil field, drilling of a production well started. This well is intended to optimize the field reserve recovery.
Drilling of the first exploration well started at the Ivanikhinskaya structure. The objective of the exploration tests is to confirm potential oil resources of 4.1 million barrels according to external estimates.
A new 25 year oil production license for the Kovalevskoye field was obtained.
"Our exploration and development efforts resulted in production and reserve increases in all regions. In 2007, 100% of our growth was organic" Maxim Barski, West Siberian's managing director stated and added: "For 2008, we are planning to increase production by more than 40% from our existing assets. We have also extracted the first barrels of oil from the Kolvinskoye field where we plan significant investments and oil production in the years to come."
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