CanArgo Energy Starts New Well on Ninotsminda Field

CanArgo Energy has commenced drilling operations on a new horizontal development well, N96H, which is targeting the producing reservoir in the Ninotsminda Field, Georgia.

The well is being drilled horizontally into the Middle Eocene to maximize penetration of the high productivity north-south orientated fractures. It is being drilled in the west of the field along a similar orientation to the successful N4H and N100H wells, both drilled in 2003. This will be the third horizontal well drilled this year on the Ninotsminda Field with a further six planned over the next twelve months.

In other areas of the business, CanArgo has received the first payment from the sale of its shareholding in Fountain Oil Boryslaw, its wholly owned subsidiary that holds a 45% interest in Boryslaw Oil Company, Ukraine. It was conditionally sold in October 2003 for a total consideration of $1 million payable in tranches.

CanArgo has also received further payments from Westrade Alliance from the sale of its holding in CanArgo Standard Oil Products, its petroleum product retail business in Georgia. CanArgo has received $2 million to date with a balance of $2 million to be paid. Interest of 16% per annum is being charged on the outstanding balance.

CanArgo also announced that it had informed the authorities in Syria that it did not wish to continue with the exclusive negotiations for a Production Sharing Contract for Block XIX in that country. After careful assessment of the commercial terms being offered in this contract compared to CanArgo's other opportunities, it was decided to withdraw from this project.