Jul 29 2013
Tethys Petroleum Limited ("Tethys" or "the Company"), the oil and gas exploration and production company focused on Central Asia and the Caspian Region, today announced an update on its Kazakhstan drilling schedule previously announced as part of the Kazakhstan work programme through Q1, 2014.
Extended and accelerated drilling programme:
- Two deep exploration wells now to be drilled simultaneously
- AKD08 ("Doto") Exploration well, located between Doris and Dione oil discoveries to be drilled deeper with additional Triassic target
- New AKD09 ("Dexa") Exploration well targeting sand channel to north of Doris discovery
- Shallow gas well program accelerated to now drill five wells back-to-back
Dr, David Robson, Executive Chairman and President of Tethys added: "We are excited to announce this accelerated and fully funded drilling programme in Kazakhstan through the first half of 2014. Our world-class farm-out agreement in Tajikistan has enabled the Company to use these funds to accelerate our drilling programme in Kazakhstan demonstrating the real synergies in our portfolio. The program is comprised of two oil exploration wells, including a deeper Triassic target, which are designed to unlock high potential prospects but represent limited risk due to their proximity to the already producing Doris field. The shallow gas exploration programme is also relatively low risk given our impressive track-record in proving commerciality in the past. This combination of high impact and low risk opportunities offers our investors exposure to significant value creation in the coming months."
Oil
The AKD08 ("Doto") and AKD09 ("Dexa") wells will be drilled simultaneously providing significant cost savings and providing exposure to two potentially high impact prospects this year.
The AKD08 ("Doto") Exploration well is located to the south-west of the producing Doris field and north of the Dione oil discovery. It is designed to target several potential zones including the Lower Cretaceous sandstone and Upper Jurassic carbonate sequences as proven in Doris and, after significantly more interpretation being carried out over the summer, also the deeper Triassic sequence which had very good hydrocarbon shows in other wells in the near vicinity, including the AKD01 well (Doris oil discovery). Prospectivity may also exist in the Jurassic sandstone sequence which flowed oil in the Dione (AKD03) well. The Doto prospect has 22 million barrels gross mean unrisked recoverable prospective oil resources attributed to it (Gustavson & Associates) in the Cretaceous and Upper Jurassic sequences. The deeper Triassic sequence has not been independently assessed as yet and therefore the Company is unable to quote a reportable resource estimate for this horizon but the Company believes it to be an attractive prospect.
This well is planned to commence drilling operations in early September and is forecast to take approximately 70 days to drill to a planned total depth of 3,500 metres using Tethys' own ZJ70 "Telesto" rig.
The AKD09 ("Dexa") exploration/appraisal well is located to the North-west of the producing Doris field and is designed to target Lower Cretaceous channel sandstone sequences similar to the current major producing unit in the Doris field. The Dexa prospect has 14 million barrels gross mean unrisked recoverable prospective oil resources attributed to it (Gustavson & Associates).
This well is planned to commence drilling operations at the end of September and is forecast to take approximately 45 - 50 days to drill to a planned total depth of 2,400 metres using Tethys' own ZJ30 "Tykhe" rig which is no longer needed in Tajikistan and is being mobilised from there.
Both prospects offer relatively low risk exploration/appraisal opportunities and are the two closest currently identified exploration/appraisal targets to the Doris oil field itself.
On the Doris field itself further analysis of the producing wells is underway prior to the installation of artificial lift equipment and improvements in fluid handling planned for September. This work has resulted in production levels being temporarily reduced and currently the field is producing some 2,600 barrels of oil per day and further work is underway. Once the work is completed production is planned to return to over 3,500 barrels of oil per day.
Gas
Commencing in late September/early October five further shallow gas exploration wells are expected to be drilled consecutively on a number of additional prospects and leads which have been identified based on seismic data. These are relatively low risk targets and of the last 13 shallow exploration wells previously drilled by Tethys in the Akkulka Block, 11 tested commercial gas. This accelerated program will continue into H1 2014.
The planned gas exploration wells are typically 600-800 meters measured depth and will take up to three weeks each to drill. Currently these are located mainly in the central and south-eastern part of the Akkulka Exploration Contract and relatively close to existing gas infrastructure and the Akkulka Production Contract area.
Tethys has re-focused some of its investment into accelerating gas development and exploration after the significant increase in the realised gas price in January of this year. Current gas production is approximately 380,000 cubic metres (13.6 million cubic feet or 2,267 barrels oil equivalent) per day. The new Kazakhstan-China gas trunkline under construction (planned to pass through Tethys' contract areas) will provide an additional commercialization route and offers potential further price upside. Overall infrastructure in the field area is also improving and a new railway is now under construction with a new rail station planned to be built only some 70 kilometres from the Doris oilfield and 23 kilometres from the nearest Akkulka gas well. This could provide more cost effective transportation options for oil plus a nearby market for some gas.
The references in this press release to "prospective resources" means those quantities of petroleum estimated, as of April 30, 2012, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of these resources.
The resources estimates contained or referred to are estimates only and are not meant to provide a determination as to the volume or value of hydrocarbons attributable to the Company's properties. There are numerous uncertainties inherent in estimating quantities of resources and cash flows that may be derived, including many factors that are beyond the control of the Company. The following is a non-exhaustive list of factors which may have a significant impact on the above estimates of prospective resources: despite the classification that they are as yet undiscovered but may be potentially recoverable the Company may be unable to carry out the development or their potential recovery; the activity may not be economically viable; the Company may not have sufficient capital or time to develop them; there may be no market or transportation routes for the production; legal, contractual, environmental and governmental concerns might not allow for the recovery being undertaken; reservoir characteristics might prevent recovery. The recovery of the resources is subject to the following risks and uncertainties: market fluctuations, the proximity and capacity of oil and gas pipelines and processing equipment, government regulation, political issues, export issues, competing suppliers, operational issues (exploration, production, pricing, marketing and transportation), extensive controls and regulations imposed by various levels of government, lack of capital or income, the ability to drill productive wells at acceptable costs, the uncertainty of drilling operations, factors such as delays, accidents, adverse weather conditions, and the availability of drilling rigs and the delivery of equipment.