The Board of Jupiter, the Kazakhstan-focused oil exploration and production company, quoted on AIM, is pleased to provide shareholders with the following update on Block 31.
In March 2012 the Company applied for a 2 year extension to the Block 31 Exploration Licence. The Exploration Licence has an initial 6 year term (ending December 2012) with two 2 year extensions. The first of these extensions has now been approved by the Kazakh authorities, thus enabling the Company to continue exploring on Block 31 until at least December 2014. It is expected that the second 2 year extension will be applied for during 2014.
The Block 31 contract also provides for a 25 year Production Licence term and it is the Company’s intention to continue exploring on the southern section of Block 31 whilst also applying, during 2013, for a Production Licence for the already discovered Akkar East field in the northern section of Block 31.
As part of the Trial Production application process, an estimation of reserves associated with the J-51 and J-53 wells had to be prepared under the accepted Kazakh standards and then submitted to the Kazakh authorities for approval. The Company can confirm that the State Reserves Committee has now approved reserves for the areas associated with the J-50, 51, 52 and 53 wells.
The State Reserves Committee has approved C1+C2 reserves equivalent to ~37 million barrels (mmbbl) of oil recoverable under the Russian GOST classification system; while similar, the Board caution against extrapolation of this figure directly into the 1P (proved) or 2P (proved plus probable) classification of the Petroleum Resource Management System (PRMS) used by international oil and gas companies. Furthermore the Board advises that the estimation of C1+C2 reserves for Block 31 quoted above includes reserves for both the Triassic and Jurassic formations penetrated by the four wells, J-50, J-51, J-52 and J-53 and advises that the 24 mmbbl 2P recoverable reserves estimation prepared by Synergy currently in the public domain post the release of the May 2011 Competent Persons Report (CPR) are those within only the Triassic horizon after drilling J-50 and J-52.
The Company expects to appoint an independent reserves engineer to undertake a comprehensive reserves study using the PRMS standards in early 2013, following the drilling of the next two exploration wells scheduled for 2H 2012. These wells are to be drilled on the new southern extension.
The J-53 well is the Company’s fourth exploration well and the first of its two 2012 commitment wells on Block 31. The well is located 2.8 km southeast of the J-52 well and increases the known areal extent of the Akkar East field. The J-53 well reached a total depth of 3,113m on 21 January 2012. During the subsequent 3 month testing period, the J-53 well was fracture stimulated and exhibited a flow regime with only periods of intermittent production, recovering oil and water. Initially the unstable flow regime was thought to be the result of flowing back completion fluids into the well bore which inhibited the natural flow of oil from the reservoir.
Further analysis of the chemical composition of the recovered water and pressure transient data indicates that during the frac and acid stimulation work carried out on J-53 during its completion, the zone from 2,996m - 2,999m propagated a fracture down to penetrate the oil water contact. The resultant water influx from this 3m zone has impacted the overall performance of the well and the composition and quantity of the liquids produced.
Selective water shutoff using a permeability modifier has been determined as the most effective way to isolate the water within this zone such that the flow of hydrocarbons is able to take place uninhibited and not reduce the overall productivity of the mid Triassic formation.
J-53 Forward Plan
The forward plan for J-53 is to apply to the Kazakh authorities to get permission for an extension to the already completed 3 month testing period such that the workover of J-53 well can be undertaken and the well flow tested for a reasonable period of time, determining a stabilized flow rate of hydrocarbons.
Post this work, and assuming success, the well will then be shut in and an application will be submitted to the relevant regulatory authorities for the well to be put onto a Trial Production Licence, similar to the application also being submitted for the J-51 well.
Further updates on the performance of the J-53 well will be provided to shareholders in due course.