Matrix Experiences More Delays on the Langsa L1 Well

As previously reported, the L1 well on Matrix's Langsa Offshore Technical Assistance Contract area in the Malacca Straits off North Sumatra had been temporarily shut down following the discovery of a leak of hydraulic fluid in a control flow line for the sub-sea production system.

Matrix advises that its engineers and consultants have continued to evaluate whether the L1 well could be re-opened by methods other than by complete re-entry and repair of the sub-sea production system using a drilling rig.

A further program to re-open the well has recently been attempted by a group of sub-sea experts including engineers from the FPSO contractor, Matrix Oil and two other external consulting engineering companies. Following completion of an extensive testing program, it was agreed conclusively that the sub-sea safety valve (SSSV), which is down hole and below the subsurface production system is now unable to be re-opened, and the leak near the valve can now only be repaired by intervention with a drilling rig.

Matrix has commenced negotiations with service contractors to undertake the work required to mobilize a drilling rig and associated services to the Langsa TAC area site. This work will also require agreements with previous creditors, current contractors and other service companies required to perform the work. These include rig operators, fuel suppliers, medical support, supply vessels, mud and chemical suppliers, testing and geoservice companies, tubing and completion equipment suppliers, subsea experts, diving and ROV contractors, security, safety, catering and other support systems as required. Agreements with previous financiers and contractors will also be renegotiated, to allow for the delays in cash flow caused by the shut down of the L1 well.

The Board of Matrix expects to conclude agreements for the refinancing of the project and amendments to the necessary contracts shortly. With the information obtained from pressure and attempted flow tests that have continued to be undertaken at the L1 well, the repair program is expected to commence immediately, so as to enable the return to full production at the Langsa TAC.

The L1 and L2 wells were together producing up to 7,000 barrels of oil per day before L1 was shut down. The L2 well is continuing to flow at a rate of approximately 2,200 barrels of oil per day (bopd). The re-entry of the L1 well is expected to be completed within four to six months.

Matrix is also evaluating the feasibility of re-entering the H3 well using the available drilling rig. This would lead to an increase in production by approximately 3,000 bopd to a total of 9-9,500 bopd.