Nelson Reaches Milestone at Alibekmola & Kozhasai Fields

Nelson Resources reports that its 50% owned affiliate, Kazakhoil Aktobe (KOA), has reached an oil production milestone of one million metric tons (7,550,000 barrels) during July. Combined production from the Alibekmola and Kozhasai oil fields have maintained levels consistently over 20,000 bopd (barrels of oil per day) since June 1st 2004, with peak production reaching over 23,000 bopd. KOA is continuing its four-rig drilling program with the Alibekmola field and a fifth rig is being considered for the start of the Kozhasai Pilot Development Program later this summer.

Last month, KOA started a pilot water injection project in Alibekmola field, by taking well A-54 off line and converting it into a water injection well. Senior Vice President of Operations, Mr. S. A. (Al) Sehsuvaroglu stated: "We are pleased to see the start of pilot water injection in the Alibekmola field. While we are still evaluating the effectiveness of the water flood in this location, enhanced recovery methods such as water and gas injection have been used successfully to increase ultimate recovery by the industry throughout the world."

Total field production for Nelson group companies for June were the following: KOA 645,150 barrels or an average of 21,505 bopd (50% net interest to Nelson); North Buzachi 238,714 barrels or an average of 7,957 bopd (50% net interest to Nelson); and Chaparral/Karakudukmunai 242,686 barrels or an average of 8,056 bopd (36% net interest to Nelson). Nelson's aggregate average daily production, net to its working interest, was 17,631 bopd for the month of June 2004. "We should see continuing increases in production rates for all of our fields through the remainder of 2004 as we are pursuing active drilling and development programs at all locations", remarked Mr. Sehsuvaroglu.