First quarter 2007 oil production and exploration update
West Siberian Resources Ltd`s oil production for the first quarter 2007 amounted to 2,264,658 barrels (1,421,872 barrels), and the average daily production increased to 25,163 barrels per day (15,799 barrels per day).
In the first quarter, production was affected by unusually mild winter weather causing delays in executing the 2007 capital program. Field activities such as delayed road constructions, rig mobilizations and gathering of seismic data restricted production enhancement activities.
Production was restarted at the West Kochevnenskoye oil field in Volga Urals, which had been shut in since April 2006.
The 2007 production plan remains unchanged, despite first quarter production being slightly below internal production targets. Production increases late in the quarter support the production plan targets of 5 million barrels in the first half of 2007 and 7 million barrels in the second half of the year.
Tomsk region
Total production in the Tomsk region for the quarter was 707,285 barrels (484,949 barrels). 2 new wells were completed and sixteen workovers aimed at production support were accomplished at existing wells.
At the Kluchevskoye oil field, two new wells were completed and put into production. An additional well is being drilled. Hydro fracturing was successfully performed on seven wells in the field resulting in significant production increases from these wells. Preparations are underway to inject water in the Kluchevskoye oil field with water flooding planned to start in the current quarter.
At the Puglalymskoye field, the drilling program is also scheduled to start in the second quarter. At the Khvoinoye oil field, the gathering of 3-D seismic covering 83 km2 started. At the Middle Nyurola oil field, two wells are shut-in awaiting a high capacity workover rig.
During the first quarter a series of construction work was completed at the Kluchevskoye and Puglalymskoye fields, including all ground construction works (pads, roads and etc.), oil products and water injection storages and a helicopter landing site. The winter program for special equipment delivery was fully executed including deliveries and installation of a compression pump station and a block-sectional pump station, 4 electric transformers substations, and 2 metering stations for the fields.
Timano Pechora region
Total Timano-Pechora region oil production for the first quarter amounted to 641,257 barrels (699,911 barrels).
An intensive development program has started in the region. 320 km2 of 3-D seismic was gathered at the North Kharyaga, Lek Kharyaga and Kolvinskoye fields. The 3D seismic volume acquired fully covers license obligations. Two rigs started production drilling at the North Kharyaga field and another rig is being mounted at the Lek Kharyaga field. Three abandoned exploration wells at the Lek Kharyaga and Kolvinskoye fields are being reactivated for production evaluation purposes. Seventeen workovers were performed on existing wells to support production.
The construction of a 6.4 kilometer pipeline from the Lek-Kharyaga field to the oil treatment facility at the Middle Kharyaga field has reached the final stages. Three gas powered generators were installed at the Middle Kharyaga field for supporting the North and Lek-Kharyaga fields. Construction and installation of oil storage and treatment facilities are underway in the fields.
Volga Urals region
Total Volga Urals region oil production for the first quarter amounted to 916,116 barrels (237,012 barrels).
The Kochevnenskoye oil treatment facility is operating at full capacity which currently limits production increases. Therefore, three wells at Kochevnenskoye field were shut in resulting in production reductions of approximately 64,000 barrels of oil in the quarter. An additional three-phase separator was installed to upgrade the facility and will start operating in April.
A new production well, no 115, was drilled at the Kovalevskoye field and will be completed for production shortly. Production tests showed inflow of 2,000 barrels per day. The rig is currently moving to another well.
The West Kochevnenskoye field development plan was approved by the federal agency and production was reestablished from the three existing wells which had been shut in since April 2006. At the field, a new production well is planned to be drilled.
A 3-D seismic survey covering the Kochevnenskoye, the West Kochevnenskoye and the Solnechnoye fields is in progress. Drilling of two exploration wells, at the Kovalevskoye oil field and at the West Borshcevskoye prospect, started. The production license for the Solnechnoye oil field, where an oil discovery recently was made, was obtained. Twentytwo workovers were performed on existing wells to support production.
Construction works in the region included high voltage power lines, a 7 km oil pipeline and a 1 million m3 fresh water reservoir.
2007 production plan update
The 2007 production plan was confirmed with the objective to produce a total of 12 million barrels with daily production reaching 42,000 barrels by the end of the year. Production growth is expected to accelerate in the second quarter and continue throughout the year, as indicated by the production plan targets of 5 million barrels in the first half of 2007 and 7 million barrels in the second half.