Valkyries Tests Oil from First Orenburg Well

Valkyries Petroleum has recently drilled well 200 in the Ashirovskoye Field, Orenburg Region, Russia which is currently undergoing production testing. Based on the analysis of the electric logs on this well, two intervals in Devonian age rocks were planned for testing. The first interval, in the Afoninsky Horizon, was perforated and swabbed. Water free, light oil flowed from the reservoir at relatively low rates. This is significant as the Afoninsky zone had never been tested in the field and no proven, probable, or possible reserves were attributed to it in the previous reserve reports. Valkyries will review alternatives for increasing the flow of this section by stimulation techniques including hydraulic fracturing and horizontal drilling of this reservoir on future wells.

The second interval tested in the well is the Devonian Pashinsky Horizon, which will be placed on long-term test production. Following perforation with tubing conveyed guns there was a strong oil flow to the surface. Over the past week, the well has been flowed at various choke settings to meet the Russian standards for well testing. On a 10 mm choke (4/10 of an inch), the well flowed at a rate of 907 BOPD with a flowing wellhead pressure of 200 psi. The oil recovered was 31 degrees API gravity with no formation water. An early production system for this well is presently being fabricated.

A second well in the eastern part of the structure commenced drilling last week and is presently preparing to core Permian objectives proven in other parts of the structure. This well is in an area of the field which was drilled in the 1950's and 1960's with good indications of oil on logs, but which was never tested. The well will be drilled to the deeper Devonian objectives after which a completion and testing plan will be made based on log and sample data.

Valkyries President and CEO Keith Hill stated "We are extremely pleased with the results of the new well. With successful confirmation of one of the main reservoir targets, we plan to aggressively pursue development of this field and hope to reclassify a large portion of the existing probable reserves to proven reserves by year end."