Candax Suspends Operations at Chaal-1

Candax Energy says that current operations have been suspended on the Chaal-1 well in Tunisia. The current program was designed to utilize a coiled-tubing unit to displace the remaining heavy mud in the well which had adversely affected the initial tests, and then to re-perforate and perform an acid squeeze on prospective zones. Candax planned to re-perforate the zone that was first perforated in the original drill stem test DST-2, and then also perforate across an untested higher interval, originally planned as DST-3.

While the well was being flowed back after an acid injectivity test on part of the DST-2 zone, a sudden loss of annulus pressure was observed, which on examination was clearly due to the development of a leak between the annulus and the tubing. In order to resolve the communication problem, the completion would need to be pulled, and this operation would require a rig. As no rig was immediately available, the completion of the perforating, acidizing and testing operations on the well could not be safely undertaken, and the decision to suspend operations on the well was made. Going forward, Candax and its partners will review all options and decide on the best plan for the appraisal of the discovery.

Michael Wood, President & CEO commented, "We were hopeful that the coiled tubing intervention could provide us with the information required to determine the economic viability of the well. Although we were encouraged by the continuous flow of gas at sub-economic rates during the operations, the failure to be able to complete our anticipated program is very disappointing. Although we have confirmed that the Chaal structure contains significant gas and condensate reserves potential, and that the quality of the gas is excellent, we have yet to achieve our third objective - namely a test flow at economic rates. Candax and its partners, Mitsubishi and SMIP, will undertake a thorough technical review of all options for further appraisal, which will be announced once agreed to."