Manas to Spud Second Mongolia Well

Manas Petroleum announced that its subsidiary, Gobi Energy Partners LLC., plans to spud its second well in Mongolia on September 20, 2012.

Although Gobi Energy had originally planned to drill its first well - Ger Chuluu A1 - to a depth of 3,937 feet (1,200 meters), it stopped drilling at a depth of 3,602 feet (1,098 meters) without having encountered any seal. Well costs should amount to approximately $1.1 million. Gobi Energy had also planned to drill its second well – East Sainshand A1 - in another sub-basin of the East Gobi Cretaceous basin, which is located approximately 106 miles (170 kilometers) away from Ger Chuluu, but management has decided to drill a second well in the Ger Chuluu sub-basin before moving to East Sainshand A1. Management believes it is important to have a conclusive evaluation of the Ger Chuluu sub-basin and a high degree of comfort that Gobi Energy is not leaving untapped potential behind.

Goby Energy drilled Ger-Chuluu A1 in an effort to prove the extent of the Zuunbayan sub-basin petroleum system. The well was based on detailed 2D seismic associated with a passive seismic survey and was drilled on top of the structure. Both Lower Cretaceous source rocks and reservoirs were documented in the vicinity by outcrop studies. One of the key assumptions of the model was the continuity of the source/seal formation (Zuunbayan formation) over the structure – as indicated in outcrops. Unfortunately the inversion of the targeted anticline proved to be higher than expected. Only a few meters of shale were encountered by Ger Chuluu A1 and therefore the well-developed reservoirs of the Lower Cretaceous Tsagaantsav formation were water bearing, although Gobi Energy did find some indication of remnant oil.

In locating the second well - Ger-Chuluu D1 – Gobi Energy has considered the lessons learned from Ger-Ghuluu A1 and is targeting a mixed stratigraphic-structural trap on the eastern flank. Gobi Energy intends to drill this well to a total depth of 2,133 feet (650 meters) at a cost of approximately $.7 million.

"To depart from the Ger Chuluu sub-basin without having a conclusive test of its potential, especially after considering the knowledge we gained from Ger Cherluu A1, would not fit our Mongolian exploration strategy for the East Gobi Basin," said Werner Ladwein, President of Manas Petroleum.

Gobi Energy's plans to drill East Sainshand A1, located 106 miles (170 kilometers) away, during the current year will now depend mainly on a smaller seasonal window.