Max Petroleum (LON:MXP), the exploration and production company working in Kazakhstan, has made a new oil discovery with its SAGW-1 exploration well in the Sagiz West prospect on Block E.
The well, which was spud in late August, reached a depth of 1,406 metres with electric logs indicating 27 metres of net pay, including 21 metres of oil and 6 metres of gas pay, over a 114 metre interval in the Triassic formation at measured depths between 1,177 and 1,291 metres.
Max said that reservoir quality was very good with porosities ranging from 18% to 25%. Based on current geophysical mapping, together with electric logs and pressure data recorded in the well, the company estimates oil in place in the Sagiz West Field at 66 million barrels with expected recovery factors ranging between 20 to 30%.
Max is now running production casing in the well, which is expected to be completed and placed on test production upon receipt of the requisite government approvals. A confirmation well will be drilled in early 2012. Two further appraisal wells are also being planned for next year.
Separately, the company said it had begun drilling the ASK-2 exploration well in Block E, targeting Jurassic and Triassic reservoirs with estimated unrisked mean resource potential of 50 million barrels of oil. The total depth of that well will be approximately 3,300 metres.
Max holds an interest in the Blocks A&E Licence in Kazakhstan and is prioritising a programme of exploration drilling on an inventory of prospect in shallow, post-salt areas as well as a deeper, pre-salt portfolio. In the year to March, revenues from production increased by 28% to $55.3 million from sales of 760,000 barrels, while losses narrowed to US$18.2 million from US$253.4 million the previous year when the company was forced to account for more than US$100 million of impairment charges. Last year, the company extended the exploration period for its Exploration and Production Licence for two years until March 2013.
Michael Young, the president and CFO of Max, said: “This is an excellent result for the company and our shareholders. Sagiz West is a large, conventional post-salt discovery that validates our focus on the Triassic rim play type that makes up the majority of our forward shallow prospect inventory. We have now drilled eight successful wells since March 2011, with three discoveries, bringing our overall success rate with our shallow exploration programme to 50% since January 2010.”
