2 March 2010
AIM: XTR
XTRACT ENERGY PLC
Drilling update - Extrem Energy
Further to the announcement made on 12 February 2010, Xtract Energy Plc
("Xtract" or "the Company") is pleased to provide further details about the
proposed exploration well to be drilled by its joint venture company Extrem
Energy AS ("Extrem") on the Siraseki licence area in Turkey, together with an
update on Extrem's activities in the Sarikiz field, where a discovery has
already been made.
Well Programme - Menekselik-1 (Siraseki licence area)
The results from seismic and GORE geochemical surveys over the Siraseki licence
(Extrem 100% interest) in the Adana basin were processed in 2009, giving rise to
a new prospect called Menekselik-1.
The Adana basin is located on the eastern part of the Mediterranean Sea, off
southern Turkey. It covers an area of more than 20,000km 2 , two thirds of which
lies under the Mediterranean Sea. It is surrounded by the Taurus Mountains to
the north, the Mut Basin to the west, and the Misis Uplift to the east. The
first commercial oil discovery was made by Mobil in 1960 from the Miocene
carbonates in the Bulgurdag field to the northwest of the basin. Since then
several wells have been drilled in the area but no further commercial discovery
has been made. Menekselik-1 aims to unlock the undiscovered potential of the
basin.
Menekselik-1 is planned to target the Aslantis sandstones. The target structure
is a fault bounded anticline with an estimated (P50) area of 14 square km and an
expected net productive pay thickness of 30m. It is calculated to be found in
the depth range between 1647-1703m. The planned total depth for the well is
2010m.
On reaching total depth, logging will be conducted in the 8 1/2'' hole section.
Depending upon hydrocarbon shows and results of the wire-line log analysis,
cased-hole testing may be carried out. If commercial quantities of hydrocarbons
are interpreted to be present, 7" casing will be run from the surface to below
the zones to be tested.
It is planned to use Merty Energy's PM-3000 rig for the work, in direct
continuation from operations on the Alasehir licence (see below). On this basis,
the spud date is likely to be during April 2010. Further updates will be
provided as appropriate.
Based on an assumed net productive pay thickness of 30m, Extrem Energy's
preliminary pre-drill P50 estimate of the recoverable hydrocarbons in place from
the Menekselik-1 well is 3.8mbbl in an oil case. For the Menekselik field as a
whole, the equivalent estimates are 28.8mbbl in an oil case or 94 billion cubic
feet in a gas case. Recovery factors of 20% and 70% respectively have been
applied.
Drilling Update - Sarikiz-3
The Sarikiz-3 well on the Alasehir licence area (Extrem 80%) was spudded on 10
January 2010. It is located approximately 525m away from previous discovery well
Sarikiz-2. The planned total depth of the well is 1950m.
Drilling has proceeded more slowly than expected. Following completion of
open-hole logs on the shallow section to 1308m on 22 February, casings were
landed and cemented into position, with that operation completing on 28
February. As at 2 March, drilling operations had resumed, with a current depth
of 1432m. The targeted Alasehir sandstones are expected to be encountered at
depths between 1570m and 1850m. Depending upon hydrocarbon shows and the results
of wire line log analysis, 7 inch casing will be run from the surface to below
the target zones and cased-hole production testing will be carried out.
Based on a 2 square km area and an assumed net productive pay thickness of 20m,
Extrem Energy's preliminary pre-drill P50 estimate of the recoverable oil in
place from the Sarikiz-3 well is 5.75mbbl, based on an assumed 20% recovery
factor. Further updates will be provided as appropriate.
Production Update - Sarikiz-2
As advised before, production from Sarikiz-2 began on 13 January 2010, with
production based on natural flow rates until the installation of a down-hole
production pump. The pump is planned to be installed by the Merty rig using a
work-over operation to be conducted after completion of the drilling and testing
operations at Sarikiz-3 (see above). Once the down-hole pump is installed, it is
expected that production from Sarikiz-2 will reach approximately 350 bbl/day, in
line with previous guidance.
An update on timing will be provided once it is clear how long current
operations at Sarikiz-3 will take.
Alasehir/Sarikiz Field Development
The actual flow rate achieved during the extended test at Sarikiz-2 and the
drilling results from Sarikiz-3 will do much to confirm the potential of the
Sarikiz oil field.
In view of the high level of uncertainty over the possible extent of the
oil-bearing structures in the wider Alasehir license area and in order to
enhance planning of further wells after Sarikiz-3, Extrem continues to evaluate
the cost/benefit of undertaking 3-D seismic over the license area. In the
meantime, an in-fill programme of 2-D seismic has been agreed, which will help
determine a location for follow-up well Sarikiz-4. It is possible that the
location of Sarikiz-4 will be at a more significant distance (a few km) from the
existing wells in order to help test the potential of the wider area. The
two-step seismic approach should help optimise the selection of the geographic
area to be covered by the 3-D project.
The information above relating to resource estimates has been provided using the
SPE standards and includes the following terms: "mbbl" (million barrels); "P50"
(mid-case scenario in relation to reserve expectations).
The above information has been reviewed and approved by Ongun Yoldemir, Managing
Director of Extrem Energy, who has a masters degree in geological engineering
and worked as an explorationist in the oil and gas sector in the Middle East,
Kazakhstan, Azerbaijan, and North Sea, has over 28 years' experience in the
resource and energy sector and is a member of the American Association of
Petroleum Geologists, European Association of Geologists and Engineers, the
Society of Exploration Geophysicists and several related Turkish institutions.
Xtract holds 50% of the equity of Extrem through a wholly-owned subsidiary.
Enquiries please contact:
Xtract Energy Andy Morrison, CEO +44 (0)20 3205 1148
Smith & Williamson David Jones +44 (0)20 7131 4000
Corporate Finance Azhic Basirov
Barrie Newton
About Xtract Energy
Xtract identifies and invests in a diversified portfolio of early stage energy
sector technologies and businesses with significant growth potential. The
Company aims to work closely with the associated management teams to achieve
critical project milestones, to finance later development stages, and to build
and crystallise value for all shareholders and partners.
For further information on Xtract please visit www.xtractenergy.co.uk
A short description of the principal assets of Xtract is set out below. These
assets are either held directly or through wholly owned subsidiaries of the
Company.
Extrem Energy AS ("Extrem Energy")
Extrem Energy is an exploration and production joint venture with Merty Energy
of Turkey. The JV's aim is to create a new medium-sized oil and gas exploration
and production business, initially focused on Turkey where Merty Energy has
particular experience and expertise. Extrem Energy has a portfolio of licence
interests including the high potential prospect at Candarli Bay in south-west
Turkey. Xtract owns 50% of the issued share capital of Extrem Energy.
Elko Energy Inc. ("Elko")
Elko is a Canadian registered oil & gas exploration company which has interests
in exploration and production licences in the Danish and Dutch North Sea. Its
major asset is in the Danish North Sea; an 80% interest on 26 offshore blocks in
a 5,400 sq km exploration and production licence close to the prolific Central
Graben oil field. Technical work indicates the potential for significant
reserves. Elko also holds a 60% operating interest in gas-bearing license blocks
P1 and P2 in the Dutch North Sea. Xtract owns approximately 50.0% of Elko's
issued share capital.
Zhibek Resources Ltd ("Zhibek Resources")
Zhibek Resources is an oil and gas exploration and production company which has
a 72% interest in the Tash Kumyr exploration licence in the Kyrgyz Republic.
Xtract has entered a farm-out agreement to fund a seismic and drilling programme
for 2008-10. Xtract owns 25.0% of the issued share capital of Zhibek Resources.
Xtract Oil Ltd ("XOL")
Xtract's wholly owned subsidiary, XOL, is focused on the development of the
Company's oil shale resources in Australia and the technology for oil extraction
from oil shale resources. Xtract has oil shale exploration rights over mining
tenements in the Julia Creek area of Queensland. In addition to evaluating third
party technologies, XOL has been developing proprietary technology for the
commercial extraction of liquid hydrocarbon products from oil shale.
Xtract Energy (Oil Shale) Morocco SA ("XOSM")
XOSM is a joint venture with Alraed Limited Investment Holding Company WLL, a
company controlled by His Highness, Prince Bandar Bin Mohd. Bin Abdulrahman
Al-Saud of Saudi Arabia. XOSM has signed a Memorandum of Understanding with the
Office National des Hydrocarbures et des Mines for the purposes of evaluation
and possible development of an oil shale deposit near Tarfaya, in the south west
part of Morocco. Xtract currently holds 70% of the joint venture.
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Xtract Energy identifies and invests in a portfolio of early stage oil and gas businesses with very significant growth potential. We aim to work closely with the associated management teams to achieve critical project milestones, to finance later development stages and to build and crystallize value for all shareholders and partners.
