Caspian Holdings Sees Positive Results from 2006 Drilling Program

Caspian Holdings reports positive results from its 2006 drilling and workover programs in Kazakhstan with production increasing 170% to approximately 300 barrels a day.

Since the start of 2006 Caspian has drilled 4 new wells:

  • Well 101 log results indicate a number of productive levels. The deepest levels have been perforated and the well tested at a rate of 45 barrels a day. A shallower higher oil saturation level is yet to be tested.
  • Well 102 log results showed two productive levels. Initial tests demonstrated hydrocarbon flows. Minor remedial work has been conducted on the well and testing will resume during June 2006.
  • Well 103 has been tested at an open flow rate of 230 barrels a day and a steady test rate on a 9mm choke of 120 barrels a day. The choke size was reduced to 4mm during May with production of approximately 85 barrels a day
  • Well 105 on the Western edge of the salt lake has been successfully drilled to a depth of 575 meters and logs have identified two oil bearing zones. The well has been cased and perforated in the deepest zone and testing is underway.

Operationally all four wells drilled have proved to be time and cost efficient, with a low capital cost of approximately USD250,000 per well. The economy of the wells will enable the Company to recover capital costs in a relatively short timeframe, based on production expectations.

The next well to be drilled will be well 104 in the unexplored Block 4. The results of well 105 and 104 should allow the Company to determine the extent of the drilling program for the rest of 2006. In particular, we will look to tie back the new well 105 to our most successful well 103 with more drilling on the salt lake anticipated.

The workover program is also progressively yielding good results:

  • Well 112 perforations have been increased and the well has come back on line producing approximately 50 barrels a day – a 40% increase on previous rates
  • Well 115 (previously considered dry) is producing at good rates up to 30-40 barrels a day
  • Well 123 (previously considered dry) is producing at around 30-40 barrels a day
  • Well 114 (previously poorly performing) is producing at 30-40 barrels a day
  • Well 107 (previously poor cementation) is producing 30-35 barrels a day

Overall 8 out of the 9 new wells drilled in 2004 and 2005 are successfully producing – a 85%+ success rate. Increased production from the workover program is now starting to kick in and boost production rates. 2006 has seen higher production rates with the wells drilled this year producing at rates significantly above the wells drilled in 2005.

Commenting on the results, Michael Masterman, CEO of Caspian said: "By revisiting old wells and drilling new wells we have managed to increase production to approximately 300 barrels per day, a 170% increase. Our drilling program is progressing well and we remain optimistic that we can build on the success of the first part of 2006. "