In January 2009, the Group completed its 3D seismic acquisition programme, having acquired in excess of 5,240 km² of 3D seismic data in Blocks A&E and Astrakhanskiy over a two-year period. As at 31 December 2008, the seismic data acquired over Blocks A&E was in various stages of processing and interpretation.
The Group’s capital restructuring was specifically designed to allow the Group to finish the processing and interpretation of the Blocks A&E seismic data, with a primary goal of maturing 10 to 15 drillable shallow and intermediate post-salt prospects by October 2009 from a portfolio of 36 existing 2D leads in the areas covered by the new 3D data. The Group completed detailed internal prospect reviews covering the Kuzbak and Bek Beke 3D surveys in May and July 2009, respectively, which have generated 10 drillable prospects as of 31 August 2009. The Group completed a third and final prospect review of the 3D survey over Block A in October 2009.
Blocks A&E – Post-Salt (Shallow)
To date, the Group has matured 12 drillable post-salt prospects, ranging in estimated size from 9 to 50 million barrels of oil (“MMBO”) with an estimated range of geological chance of success between 25% and 60%. These prospects consist of four-way and faulted three-way anticlines that are well imaged on the Group’s new 3D seismic data. These types of traps are the most common found in the existing producing fields in the Pre-Caspian Basin. Furthermore, the Group is continuing to develop several intermediate Triassic leads, which the Group believes may develop into additional drillable prospects in the future.
The Group plans to retain a 100% interest in this post-salt portfolio, as the Company believes that a drilling programme of 12 exploration prospects will offer a high probability of at least one commercial discovery, with an expectation of three to four commercial discoveries eventually resulting in a minimum of 100 Mmboe of 2P reserves, at a relatively low average drilling cost of approximately US$1.7 million per well.
The Group renewed drilling operations in the Zhana Makat Field on 31 October 2009, spudding the ZMA-AN2 development well. Max Petroleum completed the ZMA-AN2 well in late November 2009, perforating between 703.5m - 709.5m in the Neocomian reservoir, which has yielded an initial stabilised production rate of 226 barrels of oil per day (“BOPD”) flowing naturally without a pump. The Group spudded the ZMA-A12 development well in the Zhana Makat Field in late November 2009, which reached total depth as of 11 December 2009 and is currently being logged and tested.
Upon completion of the ZMA-A12 well, the drilling rig will move to the BOR-1 exploration well on the Borkyldakty Prospect, the first exploration test in the Group’s post-salt inventory. Upon completion of the Borkyldakty well, the rig will move to the KZN-1 exploration well on the North Kyzylzhar II – East Prospect, to be followed by the remainder of the post-salt prospect inventory at an average expected pace of one well per month.
Blocks A&E – Pre-Salt (Deep)
The Group’s pre-salt portfolio continues to expand and now includes 15 mapped leads and prospects consisting of two distinct play types. Of particular interest are 11 recently mapped features, which appear to be Devonian and Carboniferous-aged carbonate buildups occurring along the Guriyev Arch, an ancient geologic structure which underlies the central portion of Block E and the southern part of Block A. The portfolio also includes four shallower prospects and leads of Permian age, which are encased in salt. Individually, these prospects have estimated mean recoverable resource potential ranging from 100 to 600 MMBO. This newly updated portfolio, together with the supporting geological data, is currently being presented to potential partners for farmout with a goal to reach an agreement during the first quarter of 2010. The Group believes the pre-salt prospect and lead portfolio will be of greater interest to major and large independent oil and gas companies given the recent availability of depth processed 3D data.
Astrakhanskiy Block
The Group’s geotechnical evaluation of the Astrakhanskiy Block is complete. The block contains what appears to be an extension of the super-giant Astrakhan and Imashevskoye fields located immediately to the Northwest on the same carbonate platform. In May 2009, the Group received approval from the MEMR to extend the exploration period of the Astrakhanskiy licence by two years until 12 January 2012. The amendment also established the Group’s three-year work programme for the licence, including a commitment to begin drilling the first exploration well on the Astrakhanskiy Block on or before 31 December 2009. A request to move the drilling of this well to 2010 is being made to the relevant authorities. The Group is currently seeking to farmout or sell its interest in the Astrakhanskiy licence in order to focus its efforts on the exploration and development of Blocks A&E.
