Max Petroleum’s strategy is to apply new, exploratory 3D seismic technology to the proven, highly prolific Pre-Caspian Basin to develop a high quality portfolio of drillable pre-salt and post-salt exploration prospects. The Group has now acquired and processed approximately 5,240 km² of new 3D seismic over its two licences, which has been processed and interpreted as of the Group’s third and final prospect review in October 2009. This is the first use of semi-regional 3D seismic on the Group’s exploration acreage. In producing basins worldwide, history has shown that the first application of any new technology results in a series of new discoveries on prospects which were not detectable using earlier methods. The 3D seismic has allowed us to cull through a portfolio of leads previously generated using older 2D seismic data, as well as to identify several prospects that had never been imaged before. The result is an exciting portfolio of both pre-salt and post-salt prospects, which have a high probability of success. The risks and potential reserves of these prospects have been rigorously reviewed and quantified using industry-standard risk management techniques, which allows the Group to better define and value its drillable prospect portfolio.
In August 2008, Max Petroleum opened its office in Houston, Texas, adding a team of geoscientists to accelerate the analysis and interpretation of its extensive exploration 3D data set as it became available. Members of the new team were handpicked for this project and are experienced professionals with specific expertise in seismic processing and interpretation in salt basins, salt tectonics, basin analysis, prospect generation, and risk analysis. The Houston based team is complimented by a strong team of geoscientists in Almaty who have years of hands-on experience in Kazakhstan and historical knowledge of the Group’s exploration and development programme. Management believes that the first use of new exploration 3D seismic in one of the most richly endowed hydrocarbon basins in the world will yield a new spate of discoveries.
On a statistical basis, drilling a portfolio that includes more than ten exploration prospects greatly increases the probability of the Group having one or more commercial discoveries. The post-salt exploration drilling programme will extend through the second quarter of 2011 and will consist of individual prospects with expected mean recoverable reserve potential in the range of 9 to 50 million barrels of oil each. The Group will retain a 100% working interest in its post-salt portfolio, which is expected to be highly accretive with strong economic returns on invested capital, if successful, due to the low drilling cost of shallow and intermediate wells. The company expects to drill its 12 well post-salt portfolio over the next 15-18 months.
The Group renewed drilling operations on 31 October 2009, successfully drilling two development wells in the Zhana Makat Field by the end of last year and began drilling the first of 12 post-salt exploration prospects in January 2010. The Company reached total depth on the BOR-1 well in the Borkyldakty prospect in mid-February, with log results indicating 38 metres of net oil pay over five Triassic sandstone reservoirs at true vertical depths ranging between 1,357 and 1,536 metres. The Company has run production casing in the well, which will be tested in the next few weeks using a workover rig. The drilling rig is currently moving to the KZN-1 well location on the North Kyzylzhar II – East prospect, which the Company plans to spud in early March 2010.
Based on its review of available depth-processed 3D seismic data in Block E, the Group’s pre-salt portfolio continues to expand and now includes 11 prospects and 5 leads consisting of at least two different play types. Of particular interest are 11 recently mapped features consisting of 8 prospects and 3 leads, 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 two shallower prospects and two 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 the goal of reaching an agreement during the first quarter of 2010.
Also included in the farmout effort is the ASC-1 prospect on the Astrakhanskiy Block, adjacent to, and on trend with, the super-giant Astrakhan and Imashevskoye fields. This sizeable prospect with multi-trillion cubic feet equivalent of recoverable gas/condensate potential has been mapped on 3D seismic, and is currently being shown to potential partners.
