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Monday, 11 February 2013
Caspian Energy inks deal with Asia Sixth for new re-completion programme
Caspian Energy (TSE:CEK) has struck an agreement that could lead to a dramatic change in the group’s oil production and financial position.
The Kazakhstan-focused oil firm has signed a deal with Asia Sixth Energy Resources that will allow its oil wells to be re-completed, as advised by specialist consultant Roger Nutt.
Asia Sixth will carry out and finance re-completions on two wells initially. And it is planned that work will start on the first by mid-April, meaning the initial results will come in May.
The first re-completion, on Well 316, will involve making new perforations in five main target areas.
Each target will be tested in sequence and it is expected to take 180 days to test all five. Therefore the full results will be known between early May and September, Caspian said.
Separately, Caspian also told investors that the Toronto Stock Exchange has put the company’s listing under review and the company has 90 days to regain compliance with the exchange’s listing requirements.
Caspian says, however, that if Mr. Nutt's views are confirmed, the effect on oil production and the company's financial position will be dramatic and this will ‘ease the task of addressing the concerns of the TSX’.
"While we are committed to addressing the concerns raised by the TSX, we remain equally confident that proving Roger Nutt's theory will be a seminal moment for the company,” said chief executive William Ramsey.
“The signed agreement with Asia Sixth now makes the testing of these wells, in accordance with his theory, possible and will allow for those who have supported the company to see this exploration through while still enjoying the benefits of a public listing."
Nutt was hired to assess all the available information from the project in August last year, and in October he submitted his findings to Caspian.
According to Nutt the available data showed that the geology is not a "normal, conventional reservoir" and the reason for disappointing flow rates so far is that the wells have been completed on the "false premise that the rock is a normal, conventional, permeable formation".
Nutt believes that to achieve their full potential each well must be perforated at the depths which will give access to the ‘relevant fractures or karsts.’