CanArgo Energy Begins Drilling on Manavi 12

CanArgo Energy has begun drilling operations on the Manavi M12 appraisal well using the Saipem drilling rig, and also gave a general update on its operations in Georgia and Kazakhstan.

Drilling operations on the Manavi M12 appraisal well have now commenced using the Saipem rig. The well is located approximately 4 kilometers (2.5 miles) to the west of the M11 discovery well. CanArgo Rig #2 was used to spud the well and drill the 26" surface hole section to a depth of 397 meters (1,302 feet) whilst Saipem completed operations on the Norio MK72 well. Despite severe winter weather conditions, the Saipem rig has been successfully mobilized to the remote M12 location. The well has a planned total depth of 4,600 meters (15,092 feet), and is expected to be completed in the summer of 2006. Meanwhile on the Manavi M11Z well, negotiations have been finalized with Schlumberger to provide completion services to complete testing operations on the well. The Cretaceous interval is 293 meters (961 feet) thick and drilling data and slim hole wireline logs indicated the presence of hydrocarbons in the reservoir. It is expected that testing will re-commence in the M11Z well during April 2006.

Ninotsminda Development

The N97H horizontal sidetrack well on the Ninotsminda Field has been drilled to the top of the Middle Eocene reservoir at a depth of 2,562 meters (8,406 feet) where a 7" liner has been run. Drilling of the horizontal section through the reservoir is about to commence. The well is being drilled by CanArgo using its own rig and equipment while utilising directional equipment and services provided by Baker Hughes. It is planned to drill a 600 meter (1,968 feet) horizontal section into the reservoir whereupon a pre-perforated production liner will be run prior to testing the well and putting it on production. Results from this well are expected towards the end of February 2006. Operations have been disrupted in recent weeks due to adverse weather conditions and power outages due to the disruption of gas and electricity supplies to Georgia.


Mobilisation of CanArgo rig #2 is underway to the Norio MK72 well location in preparation for the testing of the Oligocene sand interval. These sands had good oil shows whilst drilling, with oil to surface and with hydrocarbons being interpreted on the electric logs which indicated a substantial thickness of net pay sands. High penetration perforating guns are being imported from the United States and are expected to be in the country within the next ten days, subject to obtaining the necessary explosives importation licenses. Five separate production tests are planned between 4,065 meters (13,337 feet) MD and 3,675 meters (12,057 feet) MD with a total of 108 meters (354 feet) of perforating being anticipated. All perforating will be done under-balanced or as near balance as possible in order to provide optimal conditions for testing these sands. Due to the large number of intervals to be tested, it will take several weeks to complete the test program which should commence before the end of the month. Given significant production is obtained it is planned that the well would be placed on long term test production.

Gas Sales Agreement

Terms have been agreed for a gas supply agreement from the Ninotsminda Field and it is expected that an agreement will be signed in the near future. In the meantime, the Georgian State is commencing repair works to the 36 kilometer (22.4 mile) pipeline which will deliver the gas from Ninotsminda to the buyer at the Gardabani gas fired power plant. These works have been estimated to take approximately three months. Both the signing of the sales agreement and the repair works have been slightly delayed due to the gas crisis experienced in Georgia recently when an explosion cut off the country's sole source of natural gas from Russia. The government was forced to focus on securing emergency supplies from other sources and were therefore not available to negotiate the contract for a short period of time. This incident highlights the need for Georgia to exploit its own resources so as to ensure future long-term energy demands are met by domestic gas production.


Despite extremely cold weather work continues on both the development program for the Kyzyloi Gas Field, and on further exploration in the surrounding Akkulka Exploration Area.

The latest exploration well, AKK02 has now reached total depth with gas indications and casing is being run. Testing is expected to commence shortly. Further testing has now been carried out on the AKK04 exploration discovery, with stabilized production rates in excess of 250,000 cubic meters (8.83 million cubic feet) per day having been achieved on a 30 mm (75/64 inch) choke. Testing of the AKK03 exploration well is expected within the next month, once high penetration guns have been mobilized to site and the AKK02 testing is completed. The next exploration well, AKK01 should commence within the next month once a rig is available from the Kyzyloi development program.

On the Kyzyloi Field itself the testing has commenced on the KYZ109 with gas flow to surface. This well, which is on the extreme western edge of the field, in an area which was interpreted in the past as being outside the field limits, will be fully tested over the next two weeks at various choke sizes. Testing of this well follows a reinterpretation of the well data and a reanalysis of the seismic data over the field, and if successful should result in an expansion of the field area. To date the initial Kyzyloi development wells have tested gas a combined rate of almost 700,000 cubic meters (approximately 25 million cubic feet) per day.