Crown Oil and Gas has provided the following technical update on its three properties that are located in the Saratov region of the Volga-Ural oil and gas province of Russia. With the previously announced acquisition of Langford Worldwide Holdings Corp., the Company holds exploration and development licenses for the Tereshkinsky, Kikinsko-Gusikhinsky, and Krasnoarmeisky-2 licensed areas (see the Company's news release dated April 16, 2009). The three properties comprise a combined area of approximately 500,000 acres and are accessible year-round for exploration and development activities.
The Saratov region is located in the European part of Russia on the border with Kazakhstan, which is the largest oil producing country in central Asia. The region is one of the major oil and gas provinces in Russia, with a record of more than 60 years of oil and gas production. The region has an excellent well-developed infrastructure, including a grid of paved highways, railroad and river transport, and a main cross-country gas pipeline.
Tereshkinsky Licensed Area
The Tereshinsky licensed area is located in the northern part of the Saratov region, about 100 km from the city of Saratov. The licensed area is part of the mid-Volga sub province within the vast Volga-Ural oil and gas province and covers 124,072 acres. A railway and paved highway crosses the licensed area and there is a local refinery at the regional capital city of Saratov.
The area has been the site of previous exploration, as most of the major oil-producing reservoir rocks underlie the license. Minimal geophysical studies followed by shallow exploration drilling in the 1960’s encountered oil in well cores on adjacent properties. The licensed area is underlain by the same stratigraphic units as found in drill holes on adjacent properties, but has not experienced oil production. Re-examination and modern modeling of existing geophysical data combined with additional geophysical work is underway to delineate potential structural or stratigraphic targets for subsequent drilling.
Kikinsko-Gusikhinsky Licensed Area
The Kikinsko-Gusikhinsky licensed area is located in the northern part of the Saratov region, about 120 km from the city of Saratov in the same sub province as the Tereshkinsky licensed area. The property encompasses 271,816 acres. Oil production in the area comes from Devonian marine carbonate rocks and lower Carboniferous sandstones and siltstones, notably the prolific Bobrikovsky Formation, an oil-producing formation found elsewhere in the Saratov Region. Geophysical studies and drilling were conducted in the area from 1948 through 1958. A total of ten wells were drilled: nine aimed at Devonian targets and one at a Carboniferous target. Although appropriate reservoir and source rocks were encountered, there has been no production from this licensed area. The Company plans to synthesize existing geophysical and well data with new geophysical studies to delineate and prioritize structural targets for subsequent drill testing.
Krasnoarmeisky-2 Licensed Area
The Krasnoarmeisky-2 licensed area is located in the southern part of the Saratov region, about 130 km from the city of Saratov, and is included in the Lower-Volga sub-area. The licensed area covers 98,027 acres. A railway and a paved highway traverse the property, and the main oil pipeline from Samara to the Black Sea port of Novorossiisk crosses the southeast part of the licensed area. There is an oil storage facility in the town of Krasnoarmeisk, which is located on the property. Oil production in the region comes from marine limestones of the Devonian age. Initial geologic studies were conducted in 1938. Through the years the area has been the subject of multiple geologic and geophysical studies. Wildcat and exploration drilling was carried out in the area, and drilling for structural information was done in 1958 and 1972. Although the adjacent area has a 30-year history of oil production, the Krasnoarmeisky-2 licensed area has not seen production.
Well correlation analysis of wells drilled on the licensed area with wells drilled on adjacent or nearby properties identified stratigraphic units that are correlative with productive horizons elsewhere in the area, but there is no evidence that these were examined or tested during drilling for structural information in previous years. The Company has begun to acquire and remodel existing geophysical information for the Krasnoarmeisky-2 licensed area and to conduct additional 2D seismic studies and expects to be able to define potential new drill targets on the property.
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