Max Petroleum confident of Sagiz West's appraisal

Shares in Max Petroleum (MXP) plunged almost 5% despite it being confident of successfully appraising the Sagiz West discovery "with the next two wells", scheduled to start drilling in January 2012.

The comments came after the Kazakhstan oil and gas exploration and production company confirmed that it did not encounter producible hydrocarbons in the SAGW-2 appraisal well in the Sagiz West Field on Block E. The well had reached a total depth of 1,451 metres.

In its operational update published on Wednesday, the company also said that testing has begun in the SAGW-1 well, in the lower-most Triassic reservoir from depths between 1,273 and 1,280 metres. This interval exhibits lower porosity and permeability than the four shallower Triassic zones which will be progressively tested in this well.

"The current zone appears a good candidate for stimulation to enhance productivity, such as hydraulic fracturing," the company statement read. The well, which will be recompleted into a shallower reservoir in January 2012, flowed from this interval at an initial rate of 82 barrels of oil per day, with no water.

Furthermore, the NUR-1 well is currently drilling below 4,200 metres, and is on track to reach total depth in April 2012 as expected. The well is targeting Devonian and Carboniferous reservoirs with unrisked mean resource potential of 467 million barrels of oil equivalent and a 29% chance of success.