Roxi Announces Operational Update

Roxi, the Central Asian oil and gas company with a focus on Kazakhstan, is pleased to further update the market with news of the deep discovery at its flagship BNG asset plus updates for the shallow wells at BNG and the Deep Well NK-31 at Galaz.

Background

The BNG Contract Area is located in the west of Kazakhstan 40 kilometres southeast of Tengiz on the edge of the Mangistau Oblast, covering an area of 1,561 square kilometres of which 1,376 square kilometres has 3D seismic coverage acquired in 2009 and 2010.

Roxi has a 58.41 per cent interest in the BNG Contract Area.

Deep Well A5

On 1 September 2014, Roxi announced the thickness of the gross oil-bearing interval commencing at 4,332 meters was at least 105 meters, between 4,332 meters and 4,437 meters.

It was also announced for safety reasons related to different pressure and temperature conditions at lower depths that Roxi had decided to complete the well at 4,442 meters. Once the well has been completed after running and setting 114 mm liner, flow testing will commence.

Roxi shareholders are advised that it is intended to undertake the flow test in the middle of Q4, 2014 following well completion.

Deep Well Airshagyl 6 ("A6")

As announced on 1 September a new Deep Well A6, with a planned  Total Depth of 4,700 meters, will target principally the middle Carboniferous formation of the South Emba sub-basin from 4,390 meters, with a secondary target in the Permian formation at 4,120 meters.

Deep Well A6 is expected to be spudded by year end 2014 and will be located 2,000 meters from Deep Well A5.  Following completion of a tender process Roxi will look to enter into a fixed price turn-key drilling contract with a Kazakh drilling company.

Following the experience of drilling Deep Well A5 Roxi has a much better understanding of the geology of this part of the BNG Contract Area. We shall also be using a rig with a 450 tonne carrying capacity, which has a greater operating range than the rig used to drill Deep Well A5.

Consequently, in the absence of any fundamentally different drilling conditions, Roxi expects Total Depth at Deep Well A6 will be reached in approximately 4 months from the spud date. Roxi also expects the results from Deep Well A6 will help determine the extent to which the oil-bearing interval discovered at Deep Well A5 extends below 4,437 meters.

BNG Shallow Wells

Our approach to the South Yelemes portion of the BNG Contract Area has been to drill several wells to prove the size of the area over which oil discovered in the Valanginian extends.  Wells 54, 805, 806 and 807 all drilled to depths between 2,500 and 3,000 meters have all produced oil from the Valanginian and Jurassic and are considered by Roxi to be commercial.

Well 143, which was drilled to a Total Depth of 2,750 meters in 2013, is located some 5 kilometres from Well 806 and should Well 143 test positive in the Valanginian then the probability of significant quantities of recoverable oil from this horizon would be much increased.

Initial results from wells tests between 1,943 meters and 1,950 meters in Valanginian horizon are expected by the end of September.

Galaz

Roxi is also pleased to provide an update to progress at Well NK-31 on its Galaz Contract Area.

Background

The Galaz block is located in the Kyzylorda Oblast in central Kazakhstan. The Contract Area was extended on 10 January 2011

to 179 square kilometres and now includes significant exploration upside on the east side of the Karatau fault system, as well as the NW Konys development.

The operator is LGI, the Korean multi-national, which invested US$34.4 million by way of loans into the project and paid a further US$15.6 million in return for 40 per cent of the asset. A total of 30 square kilometres 3D seismic has been acquired and processed.

Roxi has a 34.44 per cent interest in the Galaz Contract Area.

Well NK-31

Well NK-31, which is targeting the Middle Jurassic on the main Contract Area, has been drilled to a total depth of 2,642 meters with casing set to its full length.

As previously announced core samples taken between 2,070 and 2,079 meters in the Karagansaisky horizon contain an interlayering of argillite and conglomerates. 

Also as previously announced high gas shows were detected when drilling at the depth of 2,283 meters (Doshan Suite). Core samples were taken between 2,283 and 2,292 meters and preliminary, analysis showed the core consists of sandstones.

Well NK-31 will be tested between 2,445 meters and 2,468 meters in Doshan Suite with initial test results expected by the end of September.

Further announcements

Roxi's next planned announcement will be the test results at Wells 143 at BNG and NK-31 at Galaz. The release of the interim statement covering the six-month period ended 30 June 2014, is expected in the third week of September 2014.

Comment

Clive Carver, Chairman commented, "In response to market interest we are pleased both to be able to provide more clarity on the timing of the eagerly anticipated flow tests on Well A5 and the plans for follow up well A6."