Max Petroluem Moving Forward with East Alibek Program

Max Petroleum announces the conclusions of a review of a drilling proposal prepared for Max Petroleum by McDaniel & Associates, an independent reservoir evaluation consultancy, and the signing of a rig contract in Kazakhstan.

McDaniel & Associates Review

McDaniel & Associates reviewed a drilling proposal prepared by Max Petroleum's technical staff for East Alibek, one of Max Petroleum's four assets in Western Kazakhstan. The objective of this review was to confirm that the proposed location of an exploration well on the East Alibek License was in an optimum location based on the available data and to comment on the reasonableness of the range of crude oil volumes estimated by Max Petroleum to be potentially recoverable from the License.

The mean oil in place is estimated by Max Petroleum to be 17.5 million barrels (MMbbls) risked and 67.4 MMbbls unrisked. The Max Petroleum report follows the acquisition of 11 new 2D seismic lines over a portion of the East Alibek License and preparation of a new structural interpretation of the Carboniferous KT-1 and KT-2 zones in the License. In addition, a detailed log interpretation of the existing G-4 exploration well was prepared.

A summary of the conclusions of the McDaniel & Associates review are as follows:

  • There is sufficient data available to justify the drilling of an exploration well at this time and the proposed location appears to be in the optimum location of the field.
  • McDaniel & Associates conducted a Monte Carlo analysis of the potentially recoverable crude oil volumes and estimated a risked mean recoverable volume of 11.2 MMbbls, well within the range of recoverable volumes.
  • The potentially recoverable crude oil volumes have a high degree of uncertainty which is very typical of most exploration wells.

Rig Contract Signed

The Company has signed a rig contract for three firm wells with Nabors Drilling International Ltd, using Rig 40, a 2000 hp rig equipped with a 1200 hp top drive capable of drilling to depths in excess of 5500 meters. The rig is expected to commence operations on the East Alibek license area during the fourth quarter of 2006, following the completion of its current firm contractual obligations. Subsequent to the drilling of the East Alibek-1 well, the Company expects to move the rig to a location in Blocks A&E, targeting the first prospective deep structure in that acreage during the Spring of 2007. The Company then expects to move the rig on to the first deep well in the Astrakhanskiy Block.