Volga has provided an operational update on its activities.
Vostochny Makarovskoye ("VM")
Operations are currently being concluded on the VM-4 well. It was drilled on the southern portion of the field close to the edge of the Probable reserve limits. VM-4 found gas and condensate on an open hole test at a depth of 2746-2755 meters in the Evlano-Livenskiy formation. Net pay measured in the well was substantially less than anticipated.
Although it is capable of production, the Company has decided to suspend the well with the option in the future, pending an evaluation of the data, of sidetracking the well to a potentially more favorable bottom hole location.
Any impact of this well result on gas and condensate reserves in the VM field is yet to be estimated.
The immediate plan for the field is to commence production from the first two wells which will enable a dynamic modeling of the field's productive capacity and ultimate potential recovery. In the interim, the Company plans not to make any changes to Reserve estimates. Production is expected to commence shortly after commissioning of the gas processing plant and this is anticipated to come online before the end of H1 2009.
Karpensky License Area -- Supra Salt
Volga Gas is pleased to announce that the Uzenskaya-5 well has been drilled, tested and completed as a productive oil well.
An interval between 976-985 meters was tested. The well flowed at an equivalent of 731.5 cubic meters of light oil per day (4,608 bbl/day) in drill stem test. The well is expected to commence production shortly. Management believes that the well will produce initially at not less than 400 barrels per day with a 6 mm choke. Development operations on the Uzenskaya field continue with the drilling of the Uzenskaya-6 well.
"Our disappointment on VM is offset by the better than anticipated results on Uzenskaya, which will be an important source of cash flow in the short term. We hope to build on that with further low risk exploration, as we prepare to test the major sub-salt prospects in both the Karpensky and Pre-Caspian Licenses."
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