Aladdin to Develop Uktha Gas Discovery

Based on the reserve-and resource report for OOO Geotechnologia, published November 19th, Aladdin Oil & Gas Company has decided to develop and commercialize the gas field belonging to well 1A on the Middle Sedolskoya-license in Uktha, Russia.

The company has made it their goal to drill 2-4 wells to be used for production within the end of 2008. Each well is expected to produce 2-3 mcf (million cubic feet) per day. If the discovery proves to be close to the size that is presently expected, the drilling of additional 2-4 wells will be required in 2009. This can bring the gas production to a total of 16-24 mcf per day in this field over the course of 2009.

AOGC is negotiating with several interesting parties regarding purchase of the gas. Each gas well is expected to yield a positive cash flow of $3,000-$5,000 per day after royalty tax given today's price levels of US $55-$60 per 1000m3, and we are expecting that the commercialization of the gas discovery will significantly contribute to the production already at the end of 2008, says Espen Glende, CEO of Aladdin Oil & Gas Company.

The gas demand in the Uktha-area is expected to increase significantly ahead, among others following the construction of the world's largest aluminum plant close to the company's license. The authorities are indicating that gas prices will increase as much as by two to three times before 2010 as a harmonization towards European levels, which again indicates a possible upside for the company, says Glende.