Company Information for Caspian Oil & Gas Limited

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Company Statement

Caspian has a dominant acreage position in the historic and oil rich Fergana Basin in the Kyrgyz Republic, located in a one of the world's great oil provinces which stretches from the Caspian Sea to the Tarim Basin in China.

There are two separate facets to Caspian’s Kyrgyz operations. Caspian operates its 650hp drilling rig to explore and appraise prospects in its own right and in joint venture with other players, while Australian oil and gas major Santos is conducting a seismic program across all of Caspian’s leases under a separate farm-in arrangement  to assess the potential for large structures at depth.

Santos is in the second of a three stage US$24 million farmin to earn an 80% interest in all of the licences, excluding the shallow production potential down to 1,000m depth on the northern Fergana licences of Charvak, Ashvaz, East Mailisu and West Mailisu.

Caspian already produces oil from some of these shallow leases, though currently in limited quantities. Caspian has a regional headquarters in Bishkek, the capital of the Kyrgyz Republic and operational offices in Mailisu. It currently employs either directly or indirectly over 100 people.

Caspian holds a 70% interest in a company owning the Mailisu III oilfield under another joint venture agreement, with the Kyrgyz Government oil company KNG. 

The Mailisu III JV lease has no depth restrictions on it. Mailisu III is an existing oilfield and has produced about 700,000 bbls of oil to date. Existing production wells are excluded from the agreement.

To facilitate the exploration of the shallow northern acreage and the Mailisu III leases, Caspian purchased a drilling rig capable of drilling to around 2,500m  for approximately US$4 million in 2007.

The initial drilling campaign has focussed on assessing the extent and productivity of the shallow Mailisu III field.

Operations and Technology

Mailisu III Project
Separate from the joint venture with Santos, Caspian has acquired a 70% interest in the Mailisu III oilfield under a joint venture with the Kyrgyz Government's oil company, KNG.

Caspian has completed four exploration wells on Mailisu III and encountered oil in each well from shallow Palaeogene limestone beds, with only modest flow rates to date.  Further assessment work is required before the possibility of using production enhancement techniques is assessed.

Charvak Project
Caspian has three wells at Charvak producing small amounts of oil from the limestone Bed V (of Tertiary age) at depths of between 93m and 178m. The existence of oil in shallow sandstone and conglomerate reservoirs has been established by exploratory drilling with six cored bore holes drilled by Caspian Oil & Gas. The Company plans to use a contract rig to drill three shallow wells to test the sandstone and conglomerate beds in late 2008.

Ashvaz Project
The Ashvaz project consists of the Ashvaz and adjoining East Mailisu and West Mailisu licence areas.  There is good potential to commence commercial production from relatively shallow limestone reservoirs found within the Ashvaz lease areas.

To this day, oil continues to naturally seep from limestone reservoirs into the Mailisu River and from early mine workings and close-spaced diamond core holes drilled between 1939 and 1966. It has been reported that over 500,000bbls of oil was collected as part of the mining operations and still the oil continues to flow.

Ak-Bura Project
The large Ak-Bura prospecting licence covers prospective beds from Silurian to Palaeogene in age. The prospective reservoir beds identified include the Permian, Middle Jurassic and Palaeogene beds that contain the pay zones within oil fields of the Fergana Basin and Silurian and Carboniferous beds which contain pay zones of oil fields within the Tarim Basin, located 200 km to the south-east in China.

Sulukta Project
Sulukta, in the far south-western corner of the Kyrgyz Republic, has numerous oil seeps, evidence of prospective structures and existing oilfields excised from the licence area. Several large prospects and leads have been identified have recently been covered by Santos' seismic programme.

The Sulukta permit is highlighted by analogue fields and discoveries to the north in Kyrgyzstan and Uzbekistan which help confirm that several attractive prospects are present in Sulukta. These include potential stacked reservoirs starting at depths of 1,500m, but typically 2,500m and deeper. Recent work has upgraded this block and several lower risk, medium sized prospects resemble adjacent existing oilfields.

Katran Project
The Katran licence covers approximately 25km strike of the southern flank of the Fergana Basin.  Although overthrust rocks prevent the use of surface mapping to identify targets, they remain prospective for oil.

Santos is undertaking seismic over targets on the Katran licence in mid-2008.

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