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Arawak Energy Corporation Operational Update
Friday January 12, 9:04 am ET
TSX TRADING SYMBOL: ABG
ANGUILLA, British West Indies, Jan. 12 /CNW/ - Arawak Energy Corporation (the "Company" or Arawak) produced oil at a peak rate of 10,300 barrels per day ("bopd") at the end of 2006, close to the estimated productive capacity of around 11,000 bopd. Production averaged 9,000 bopd in the fourth quarter of the year, based on field estimates, up from an average 5,000 bopd in the same period of 2005, and bringing the full year average to 8,000 bopd, compared with 5,650 bopd for 2005.
Production in Kazakhstan, which averaged 4,950 bopd during the quarter, according to field estimates, was curtailed by a partial shut-in at the Besbolek and Karataikyz fields due to restricted access to third party owned processing facilities. Production will continue to fluctuate until Arawak's own free water knock-out system is commissioned, expected on-stream by end-February 2007.
In addition, the productive capacity of the highly deviated and slant wells drilled in Kazakhstan has not yet come on stream due to sand control issues. These 5 wells drilled at Besbolek and at Akzhar showed average net pay of 75 metres and, when brought onto production, are expected to add materially to existing productive capacity.
In Russia, Arawak's 50% share of production averaged 4,000 bopd in the fourth quarter of 2006, as per field estimates, up from an average 3,200 bopd in the same period of 2005. This was despite unprecedented warm weather which disrupted the winter ice roads used to transport oil from the North Irael field, acquired in the purchase of LLC NK Recher-Komi ("Recher-Komi") in June 2006, to the Company's processing facility and which therefore reduced production from that field.
Following the success of exploration well Recher-Komi 61 which proved a new pool at North Irael in September 2006, a further development well, Recher-Komi 67, was drilled and completed. Recher-Komi 67 tested at in excess of 1,000 bopd and a stable flow rate of 340 bopd through a 5 millimetre choke has been established. Production at North Irael has risen to 2,000 bopd (1,000 bopd net to Arawak) from 400 bopd (or 200 bopd net to Arawak) when Recher-Komi was purchased. Drilling has been halted pending results of the 3D seismic currently underway over the full 75 square kilometres of the field.
During the fourth quarter of 2006, drilling recommenced at Sotchemyu-Talyu after a pause for seismic re-processing. The first well to be drilled and put on line, Sotchemyu-Talyu 102, showed an initial rate of 500 bopd gross for the deepest horizon.
In Kazakhstan, following the acquisition of 3D seismic, Arawak will soon drill its first well outside the 3.8 square kilometres of its original contract area, expanded to 71.5 square kilometres in January 2006.
Exploration will begin at the newly purchased 1,845 square kilometre East Zharkamys III block with the acquisition of 2D seismic and the interpretation of existing geological and geophysical data.
In total, four rigs have been commissioned so far in Russia and Kazakhstan, where drilling is also scheduled for the Alimbai exploration block, and the Company is considering another for Besbolek dependent on interpretation of the 22 square kilometres of seismic acquired there in 2006.
In Azerbaijan, results are expected soon from negotiations to improve the contractual gas price, currently equivalent to US $1.33 per million BTU. We expect that the two high pressure gas wells, Duvanny 102 and Duvanny 108 will be tied in and completed by end-February 2007 while exploration well Kyanisadag 101 is currently being tested. A 3D seismic survey is also progressing over the Coastal block of the Southwest Gobustan EDPSA in Azerbaijan prior to 2D seismic over the remaining two blocks of that project.