JKX to Commence Gas Production at Koshekhablskoye Field in 1H

JKX provided a status update of the redevelopment of the Koshekhablskoye field in southern Russia.

Gas Processing Facility & First Gas

Fabrication of the key components of the GPF plant in Sharjah was completed during the last quarter of 2010 with the final shipment leaving port at the end of December, slightly ahead of schedule. All equipment has now been off-loaded and cleared through customs in the Russian port of Novorossiysk, some 300km from the field. Trucking to site commenced in early January, with final deliveries scheduled for the end of this week. Foundations for the equipment are in place and the construction teams have begun installation. Installation and construction of locally sourced equipment and buildings is nearing completion with hook-up and commissioning of the plant scheduled to commence by the end of the first quarter. First commercial gas production remains on target for mid-year.

Flowlines and Export Lines

Installation and testing of all flowlines, together with control and injection lines, has been completed. The twin export lines have been installed tested and tied-in to the Gazprom trunk line and are awaiting connection to the manifolds at the GPF.

Well Recompletions

Development Wells 20 and 27 have been successfully completed and tested in the Oxfordian limestone reservoir and are suspended ready for production. Together they have a potential delivery capacity of 30 MMcfd.

Development Well 25 on the north flank of the field has been re-entered using the Geostream KES-536 rig, and the remainder of the tubing recovered. Drilling of the 260m sidetrack into the limestone reservoir will kick-off this week at 5,490m with a targeted TD of 5,700m. Completion and testing of Well 25 is scheduled for the end of the first quarter.

Development Well 15, deep on the east flank of the field, was sidetracked to a depth of 5,755m with strong gas shows and encouraging logs. Disappointingly, the sidetracked well bore did not stay open during testing with an obstruction preventing deployment of the coiled tubing to TD in the open hole section. Due to the priority given to the other wells in the remainder of the first phase, remedial action, which may include a new sidetrack, would be undertaken as part of the second phase of well recompletions later in 2012.

Tubing has now been recovered from the Callovian appraisal Well 09 to a depth of 5,312m using the Kremco-900 rig. Preparations are currently underway to sidetrack the well through the Callovian sandstone reservoirs to a TD of 5,500m. Completion and testing of Well 09 is now scheduled for the second quarter of the year.

A smaller A-125 rig has been used to prepare exploration Well 22 for deepening. The well has been suspended at 4,885m awaiting mobilization of the Geostream KES-536 rig to deepen the well to the Callovian sandstone reservoirs with a TD of 5,570m. Completion and testing of Well 22 is scheduled for the third quarter of the year.

JKX Chief Executive, Dr Paul Davies, said, "We are very pleased with the progress made on the Koshekhablskoye field in Russia, which is on track to commence gas production by the end of 1H at the plant design capacity of 40 MMcfd. This keeps us on track to achieve the Group's overall near term production objective of 20,000 boepd."