Matra Hopeful in Russia, Moves Forward with Field Development

Following the successful acid treatment on Well A12, Matra has provided an operational update on the Sokolovskoe discovery in the Arkhangelovskoe Licence in Orenburg, Russian Federation. Matra holds 100 per cent. of the Arkhangelovskoe License. 

Recoverable Contingent Resource Estimates
Independent consultant Senergy Limited, who prepared the pre-drill independent report on the Sokolovskoe structure, has calculated a recoverable contingent resource range for the Sokolovskoe discovery based on mapping derived from new and reprocessed seismic and with the inclusion of data from A11 and A12 wells.  The new map shows Well A12 to be on the western flank of the structure and the currently untested crest of the structure to be 37 meters higher and around 2.6km to the East.
Senergy reviewed the potential development and economics of the field for the best estimate case. This case assumes a development with 21 producing wells and 7 water injection wells drilled during the whole field life, with peak production of around 8,500 barrels per day reached in 2012. 
The economic valuation of the best estimate case, using a domestic oil price of US$58/bbl, calculates a Net Present Value (NPV) of US$172 million at a 10% discount rate.

Field Development
The process of applying for a Production Licence over the discovery area has begun.  A reserve estimate was completed in accordance with Russian guidelines and submitted to the state authorities for approval.  The estimate completed by a local Institute early in 2008 calculated recoverable reserves in the Russian category C1+C2 of 13.7 mmbbls on the basis of pre-2008 seismic, and data from the first well only.  Formal approval of this estimate is expected shortly.  Once the estimate is approved a field development plan will be submitted for approval.
Well A12 Production Testing

Pressure analysis of the well after the acid treatment showed that formation damage previously limiting the flow of the well has been removed by the treatment.

The well was returned to production after shut-in and gradually opened to a 6mm choke when the well flowed at 660bopd with a wellhead pressure of 735psi.  After several days flowing on this choke size, the well was producing limited amounts of water (4-8%) and to safeguard the future of the well production was choked back to 4mm.  The well has been controlled to flow at these reduced rates (250-320bopd) with a wellhead pressure of around 700psi and water cut of up to 20%.  

The remapping of the Sokolovskoe discovery shows Well A12 to be on the flank of the structure. The source of the water production could be from the main oil-water-contact in the field or alternatively, from a slightly deeper horizon known to be a strong water producer. The well will be monitored whilst production continues and production logging will be considered for identifying the source of the water.
As the A12 well is on the flank of the structure, water production is not unexpected and there are no negative implications for the overall development of the field. Indeed pressure support from an aquifer could maintain productivity and improve recoverable volumes from the main field. Alternatively, if water is being channelled behind casing from a deeper horizon, this could be mechanically shut-off.

Forward Plan
Fulfillment of the obligations, under the Exploration Licence, requires Matra to drill two further wells before August 2009. 

The revised mapping of the Sokolovskoe discovery and the exploration prospect in the south of the block requires approval for new drilling locations. Following receipt of this approval and the contracting of a drilling rig, Matra first intends to drill a crestal location on the Sokolovskoe discovery followed by a well on the southern structure.

Once the crestal Sokolovskoe well is completed, further appraisal production wells may be drilled according to Production License approval.