Caspian Continues Finding Oil at Zhengeldy Field

Caspian Holdings

Caspian Holdings reports more positive results from the drilling campaign at its Zhengeldy oil field. Commercial oil production rates have been tested in wells 102 and 104 and the interpretation of log results on recently drilled wells – 109 and 118 – shows good oil pays.

Well 102 was perforated and tested at the interval, 178-180.5 meters and is currently producing 25 barrels of oil per day ("bopd"). Well 104 was perforated and tested in early August and yielded production rates of 16 bopd.

Well 109 was drilled to a depth of 734 meters in the south of Zhengeldy dry salt lake. Analysis of the open hole log results shows a good oil bearing reservoir below 170 meters with a gross pay of 13.9 meters and a net pay of 5.1 meters. Porosity in this well is high, at 35%, with oil saturation of 58%.

Well 118 was drilled to a depth of 400 meters in the middle of the Zhengeldy dry salt lake, near the successful Well 103. Analysis of the open hole log results shows potentially two oil-bearing reservoirs between 255 meters and 355 meters. The best level is at 255 meters with a gross pay of 4.9 meters and a net pay of 3.1 meters with porosity of 32% and an oil saturation of 52%. It appears that there is a gas cap above the oil bearing level which should support higher production rates.

Wells 109 and 118 will be perforated and tested during September and October.

Detailed re-evaluation of logs indicates a gas cap in the Jurassic level in block 2 covering wells 103, 113 and 118. The gas cap can be used to sustain production rates from this block. As a result Well 103 will be re-perforated in the oil bearing reservoir below the gas cap. There will be short term reduction in production during the work over process.

With the arrival from Schlumberger, of our new operations manager, Essien Umoren, we are in the process of conducting an extensive petrophysical review of well data with a view to identifying new production zones and increasing production. An updated summary of the 2006 wells is shown below. Overall the field has very good porosity and good oil saturation.

Commenting on the results, Michael Masterman, CEO of Caspian said: "These recent results from Well 109 and 118 demonstrate that we are consistently finding oil from our 2006 drilling program and are building a solid production capacity."