Arawak Inks E&P Contract for Alimbai Block in Kazakhstan

Arawak Energy has signed a contract for the exploration and production of hydrocarbons for the Alimbai field, between the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan, and Altius Petroleum International B.V., a wholly owned subsidiary of Arawak.

The Alimbai field is located in the prolific Pre-Caspian sedimentary basin, approximately 150 kilometers northeast of the city of Atyrau, in western Kazakhstan, and 60 kilometers northeast of Arawak's Besbolek and Karataikyz producing fields. The contract area is approximately 133 square kilometers.

Oil was first discovered in the Alimbai field in 1944. Numerous oil shows were encountered in the suprasalt Middle Jurassic, Aptian-Neocomian and Permian-Triassic horizons during the drilling of shallow structural wells typical of the Soviet period. A well test rate of approximately 100 barrels of oil per day was also recorded. Alimbai is similar to Arawak's Besbolek field, where oil was discovered in 1959 during drilling of shallow structural wells but the field was never adequately appraised. The contract area is prospective for both suprasalt and subsalt horizons, and it is noteworthy that Alimbai is located 20 kilometers south of the Kenbai field, operated by the national oil company, which at about 220 million barrels of recoverable oil in place, is the largest suprasalt field in the Pre-Caspian basin.

The program will commence with re-interpretation of existing seismic data, followed by a shoot of new 2D seismic next year. Existing wells will also be evaluated with a view to identify re-entry candidates.

A signature bonus of US $0.43 million will be paid within 30 days, and beyond this there are commitments to US $1.8 million to be spent over a 6-year Exploration Phase. Upon declaration of commercial discovery, the Exploration Phase will be followed by a 25-year production period.

Arawak's CEO Alastair McBain said "We are very excited to have added to our resource inventory in Kazakhstan. We believe that it opens up new exploration opportunities for us, both in the shallow suprasalt areas as for our other Kazakhstan fields as well as the deeper potential".

Arawak's common shares are listed for trading on the TSX Venture Exchange under the symbol "ABG". The Company is engaged in the exploration, development and production of oil and natural gas in Kazakhstan, Russia and Azerbaijan. The Company's asset in the Azerbaijan Republic is its interest in the Exploration, Development and Production Sharing Agreement ("EDPSA") for the South West Gobustan fields. Commonwealth Gobustan Limited ("CGL") holds an 80% interest in the EDPSA with the remaining 20% held by SOCAR Oil Affiliate. Arawak holds a 37.17% interest in CGL with the remaining 62.83% being held by two affiliates of China National Petroleum Corporation. Arawak's assets in Russia are held through ZAO PechoraNefteGas ("PNG") in which Arawak has a 50% interest with the remaining interest being held by Valkyries Petroleum Corporation. In Kazakhstan, Arawak's assets are held through its 100% wholly-owned subsidiary Altius Energy Corporation.