West Siberian announces oil discovery at Kolvinskoye field

Oct 12, 2008 02:00 AM

West Siberian Resources announces that an exploration well encountered oil at the Kolvinskoye field in the Timano-Pechora region in Russia. The company also provides updated information on upstream and downstream production volumes and prices for the third quarter.
At the Kolvinskoye oil field, drilling of exploration well 100 was completed to a depth of 3,780 meters. Oil was discovered in the Devonian formation. Openhole logging confirmed 18 meters of net oil pay with another 15 meters of net pay indications. The initial open flow rate amounted to 245 bpd.

Currently, acid treatment is being performed on the well. In coming weeks, down-hole samples of reservoir fluids will be analyzed and six production tests on separate intervals will be made.
The Kolvinskoye field has 154 mm barrels of proved and probable oil reserves. 15 wells are planned to be drilled until production start, scheduled for the third quarter of 2010.

"Our Timano-Pechora outlook continues to improve. The Kolvinskoye field is already our largest field and we now expect reserves to be upgraded. The production from the field will start in 2010 and will benefit from the tax holidays that Russian lawmakers recently introduced," Maxim Barski, CEO of West Siberian Resources said.
He also commented on the third quarter operating performance: "In the third quarter, the downstream economic environment improved as wholesale product prices increased while crude costs per barrel went down and we continued to increase refining volumes. Downstream performance is the most significant driver of our financial results."

For refined oil products, the average net domestic wholesale prices increased by 4 % to $ 112.74 per barrel ($ 107.91 per barrel) and average domestic retail prices decreased by 3 % to $ 135.45 per barrel ($ 139.50 per barrel) compared to the second quarter 2008. Net export prices were slightly lower at $ 77.33 per barrel ($ 78.30).
Refining volumes at the Khabarovsk refinery amounted to 6,670,000 barrels of oil in the third quarter 2008. This represents a 6 % increase in volumes compared to 6,293,000 barrels refined in the second quarter 2008.

The average gross crude oil prices received in the third quarter 2008 decreased to approximately $ 76 per barrel from $ 83 received in the second quarter 2008. The netbacks decreased to $ 47.25 per barrel from $ 53.50 per barrel in the second quarter 2008.
The average daily crude oil production increased by 61 % to 49,466 bpd from 30,703 bpd for the third quarter 2007. Currently, daily production exceeds 51,000 bpd.

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