Sibir reported its 2008 exploration program for the 8 Koltogorsky Exploration blocks in the Khanty Mansiysk District of Western Siberia.
In early 2008 the exploration program focuses on the construction of 55 kilometres of winter roads and, weather permitting, the deployment of five drilling rigs on the Koltogorsky exploration blocks. An additional 1.5 kilometres of permanent roads are scheduled to be completed in the spring of 2008 to allow a sixth rig to be put in place for the summer drilling campaign.
Following completion of the roads Sibir will drill seven exploration wells into oil prospects in the lower Cretaceous and Jurassic at depths of 2,600 to 3,200 metres. These exploration wells are each expected to take 55 days to drill and set casing.
The first exploration well was spudded on October, 2007 and reached a total depth of 3,200 meters on December 21, 2007. The first well drilled into hydrocarbon bearing sandstones as hoped for and Sibir is encouraged that the reservoir thickness exceeded expectations. For safety reasons Sibir has delayed testing of the well until April to allow for the completion of a winter road which transverses the drill pad.
These encouraging results have led Sibir to commission the reinterpretation of 2,500 km of previously acquired seismic profiles using Vertical Seismic Profiling (VSP) data from this well to better understand the potential upside of the remaining target structures and will shoot an additional 180 km of 2D seismic in Block 8.
Subject to the results of the exploration program Sibir expects to register discoveries, book reserves and apply for 20 year development licenses in the course of 2009.
The Koltogorsky blocks are comprised of eight blocks which together cover 2,100 square kilometers (520,000 acres) with an estimated 970 million barrels of C3 resources (Russian classification1). The blocks were acquired by Sibir in May, 2007 in a private transaction valued at $50 million. Overall exploration expenditure for the program referred to above is expected to total $80 million.
Commenting on the announcement Sibir CEO, Henry Cameron, said, "Our exploration program for the Koltogorsky blocks in 2008 is an aggressive one designed to quickly establish the commercial viability of these licenses and establish the official reserves base for future development. The results of our first exploration well give us confidence that our initial evaluation of the Koltogorsky opportunity was well founded."
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