Nelson Resources Adds Another Producer to Alibekmola Field

Nelson Resources reports that Kazakhoil Aktobe's production testing of Alibekmola Appraisal Well A55, its fifth appraisal well at the Alibekmola oil field in Kazakhstan, resulted in sustained flow rates of 1,100 barrels of oil per day (bpd) on a choke size of 9 mm (22/64 inch), with a sustained tubing wellhead pressure of 1,560 psi. The choke was later increased to 15 mm, boosting the well production rate to 2,300 to 2,400 bpd. Well A55 was successfully drilled to a total depth of 3,600 meters by Nelson's 50% owned Kazakhoil Aktobe on March 5, 2003 and was subsequently perforated on March 22. Its initial production is identical to those of wells A51 and A52, two of the best producers in Alibekmola field.

Under the program approved for the Alibekmola Pilot Production Project, Alibekmola A55 was targeted to test the productivity and potential of the KTII reservoir. It encountered both the KTII-1 (3,198 m) and KTII-2 (3,325 m) sub-sections, as predicted. The combined gross reservoir thickness in the well was 376 m, of which 72 m is net pay. The average porosity was 6%. The well was perforated 72 m across the KTII reservoir and put on production April 4.

"We are highly encouraged by the results of Well A55," said Nelson CEO Nick Zana. "First, the location of the well at the edge of the eastern flanks of the structure provides confirmation of the field's continued production potential. Second, we are now sure that the earlier reserves estimates will increase due to the added net volume in the KTII reservoir. We are pleased to note that KOA's sixth new well A56, being drilled by a second contracted drilling rig, has reached a depth of 2,570 m and is currently being planned for completion in early May. The seventh well, No. 58, was spudded April 13." Kazakhoil Aktobe is 50% owned by the National Oil Company of Kazakhstan, (Kazmunaigas) and 50% by Nelson. Kazakhoil Aktobe holds the license for the Alibekmola and Kozhasai oil and gas fields. These fields are situated in the Mugalzhar Region of the Aktiubinsk Oblast (region) of northwestern Kazakhstan.

Based on a recent reserve evaluation by McDaniel & Associates Consultants Ltd., the Alibekmola field has an estimated proven and probable reserve of approximately 239 million barrels, with another 168 million barrels classified as possible. In addition, Nelson has an agreement with Kazmunaigas granting Nelson an option (subject to certain conditions announced previously) to acquire a 25% participatory interest in Zhambai LLP. Zhambai holds a license for the exploration and production of hydrocarbons at the Caspian offshore blocks known as South Zhambai and South Zaburunye in the Atyrau Oblast of Kazakhstan in the North Caspian Sea close to the Volga River delta.