RH Petrogas Drills First Development Well in Fuyu 1 Block in Jilin Province

Singapore-listed RH Petrogas Limited (RHP or the Group), engaged in the business of exploration, development and production of oil and gas resources, reported Monday that the Group has commenced the drilling of its first development well at Fuyu 1 Block, Jilin Province, China.

The Group announced Oct. 16 that the Overall Development Plan (ODP) for the phased development of the Yongping Oilfield in Fuyu 1 Block had been approved by the National Development and Reform Commission of the People’s Republic of China. This approved ODP entails the drilling of up to 1,008 wells over a five year period. The wells are expected to be drilled to a depth of around 656 to 984 feet (200 to 300 meters) due to the shallow reservoir.

The drilling of the first development well commenced Nov. 17 and it is expected that up to 15 of such wells will be drilled and completed before the end of 2014. Upon the completion of drilling, the wells will be suspended in readiness to move into production in 2015 when the upcoming winter season ends.

The Yongping Oilfield produces low sulphur heavy crude oil with 18.50 degree API. In order for the oil to flow to the surface, thermal recovery using steam injection (Huff and Puff) is required for each well, which will be followed by steam flooding of the field. This thermal recovery method is a mature technology used in the oil & gas industry and the Group has employed the technology with good results in the pilot test area within the field in the last few years.

Francis Chang, CEO of RH Petrogas said, “I am very proud of our China team’s successful effort to begin drilling the first development well after obtaining ODP approval just one month earlier. The pre-development preparation since early 2013 has made this possible. These wells will start contributing to the Group’s production in 2015. The crude sales contract that was signed with CNPC provides a secure market for the oil produced.”

Moving forward, the Group will continue to process and interpret a new 3D seismic data for future exploration and appraisal programs in the Fuyu 1 Block to further assess its resource potential.

More on Fuyu 1 Block

Fuyu 1 Block is located in Songliao Basin, Jilin Province, the People’s Republic of China and is operated by Kingworld Resources Limited (KRL), a wholly owned subsidiary of the Company. KRL entered into the petroleum contract for Fuyu 1 Block with China National Petroleum Corporation (CNPC) in November 2007 (Fuyu 1 PSC). KRL has a 100 percent working interest in the Fuyu 1 Block during the evaluation phase. Upon the commencement of commercial production under the Fuyu 1 PSC, CNPC would back in for a 51 percent working interest.