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Sibir announced that the Ryder Scott Company has conducted an independent evaluation of Sibir's Koltogorsky area and has provided Sibir with its estimate, in accordance with the SPE standard, of contingent recoverable resources (Contingent Resources) discovered in the area. Founded in 1937, Ryder Scott is one of the largest, oldest and most respected international reservoir-evaluation consulting firms in the sector.
The eight Koltogorsky blocks cover 2,100 square kilometers (520,000 acres) and were acquired by Sibir in May, 2007 in a private transaction valued at $50 million. Sibir has invested a total of $55 million in exploration activities on the Koltogorsky blocks since their acquisition making Sibir's exploration program the largest exploration program currently underway in the Khanty-Mansiysk District of western Siberia, Russia's most prolific oil producing region. The Ryder Scott assessment takes into account the results of the six wells drilled by Sibir, ongoing testing of two of those wells and an assessment of seismic work done up to October 1, 2008.
Sibir drilled six exploration wells into oil traps in the lower Cretaceous and Jurassic at depths of 1,600 to 3,200 meters. Two of these wells are undergoing testing and another four wells will be tested in the early part of 2009. Two additional well are scheduled to spud in January 2009 and be tested in the early part of the year to comply with the initial licence requirements.
The Ryder Scott report has estimated un-risked contingent recoverable resources as follows: P90 – 108 million barrels; P50 – 240 million barrels; and P10 – 479 million barrels.
The Mean estimate according to Ryder Scott is 269 million barrels of oil. This evaluation takes into account only the targeted Upper Jurassic reservoir and does not include the Middle Jurassic and Cretaceous which also indicated hydrocarbon reservoirs.
Sibir has encountered hydrocarbon saturated reservoirs in all wells drilled so far. The oil found on Koltogorsky blocks is very sweet and light (over 40 degrees API) with low paraffin and asphaltine content. Because the blocks are contiguous to an existing trunk pipeline system, this oil may be exported as Siberia light which historically earns a $3-$5 per barrel premium over standard Urals blend.
Based on these encouraging results, Sibir plans to drill and test an additional three exploration wells in early 2009 beyond the eight wells which formed the pilot exploration program in the western and most attractive part of the fields. To implement the winter drilling campaign Sibir will build 45 kilometers of winter roads, redeploy five drilling rigs, and four completion and testing rigs.
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 - 2010.
Commenting on the announcement Sibir CEO, Henry Cameron, said, "Sibir is pleased with the encouraging results of exploration drilling on the Koltogorsky blocks. An extract of the executive summary of the independent resource report produced by Ryder Scott will be published on our web site in the very near future. At this stage it is clear that the report confirms our own prognosis.
"Based on results to date we will pursue an aggressive drilling and testing program during the upcoming winter and feel confident the results of this program will move us closer to development and commercial production. We have applied for an extension (to February 2011) to the license term for the six Koltogorsky blocks drilled and hope to announce this application has been successful shortly. An extension will give us adequate time to complete all necessary exploration work."