Max Gets Regulatory Nod for Trial Production in Zhana Makat

Max Petroleum has received regulatory approval for its trial production project ("TPP") for the appraisal of its Zhana Makat discovery on Block E in western Kazakhstan. The Company also announced that it has resumed drilling operations in its East Alibek license area.

Key operational highlights are as follows:

  • TPP approved for a three year period;
  • Current production in Zhana Makat is 1,800 barrels of oil per day ("bopd") from six producing wells;
  • The ZMA-A9 well, drilled near the crest of the Zhana Makat structure, is producing approximately 900 bopd; and
  • Drilling operations have resumed in East Alibek.

The approved TPP, valid for a period up to three years, allows the Company to produce existing wells in the field and to drill and produce an additional 12 exploration and development wells in order to gather additional data necessary to prepare a full field development plan. Additional appraisal wells may be added to the TPP in the future, dependent upon drilling results and the agreement of local regulatory authorities.

The Company has drilled and completed a total of ten wells in the Zhana Makat field to date, of which eight have been successful. Six wells are currently producing, including four wells returned to production on August 1, 2007 upon receipt of written TPP approval. The remaining two successful wells, which were drilled on the crest of the Zhana Makat structure, encountered some of the best pay sections seen in the field, with logs and cores demonstrating rock properties and production potential above internal expectations. However, mechanical problems at the completion stage have delayed oil production from these two wells and the drilling rig is being used to perform remedial workover operations to bring them onto production as soon as possible.

The Company is currently producing approximately 1,800 bopd from six producing wells, including the four wells recently brought back onto production. The Company is planning to drill a minimum of five additional wells in Zhana Makat during the remainder of 2007 using the rig currently under contract and plans to contract a second rig for Block E operations during October 2007 to pursue additional shallow and intermediate targets. The Company has also resumed drilling operations in East Alibek, re-entering the EA #1 well in mid-July 2007.

Steve Kappelle, Chief Executive Officer, commented:

"The approval of the Trial Production Project is a significant milestone for Max Petroleum. Zhana Makat is the first of many shallow targets that have a considerable amount of unrealized potential within our large acreage position in Blocks A & E. It is very close to export infrastructure and we are currently exporting with significant netbacks. We plan to drill additional wells in Zhana Makat in the short-term, including several crestal wells which hopefully will perform like the A9 well. As we increase production, we will work progressively towards our goal of using production and cash flow from our low cost shallow targets to fund our more extensive, potentially higher reward deep plays in our asset base."