KMG EP website

EXPLORATION ACTIVITY

During 2011 the Company conducted seismic surveys in the amount of KZT2.3 billion. The exploratory drilling expenditures were KZT8.2 billion(1), including KZT2.6 billion allocated to disposal of 7 dry exploratory wells and KZT1 billion to disposal of 4 appraisal wells. In 2012, the Company plans to carry out seismic works in the amount of KZT2.1 billion and exploratory drilling at KZT23.5 billion(1). Increase of expenses for exploration activity in 2012 mainly associated with the start of exploratory drilling on the White Bear structure and drilling of 2 exploratory wells on the JSC «Karpovskiy Severniy» acquired in 2011.

During 2011 the Company carried out exploration works in the blocks Liman, R-9, Taisoigan, Karaton-Sarkamys, Uzen-Karamandybas, Novobogatinsk Western, Temir, Teresken, Zharkamys Eastern-1, Fedorovskiy and White Bear area and appraisal works in the S. Nurzhanov, Prorva Western, Eastern Makat fields.

At Liman block, the analysis of 3D seismic data of 165 sq. km on the Novobogat South Eastern structure was finished. At well G-3 with a projected depth of 1,400m the drilling was halted at 1,250m. The well is in the stage of third object testing. Third object testing has indicated oil production facility at the level of 36 tonnes/day. Well G-4 was drilled to a depth of 1,650m. Due to absence of productive reservoirs according to geophysics and borehole core data the well has been abandoned.

In 2012 on Liman block, for the discovered oil deposits of Novobogat SE to be delineated, 2 exploratory wells of 1,600m and 1,400m will be drilled to track post-salt Midle-Triassic deposits. Apart from that, based on 3D seismic results to analyze the potential of 2 prospects, 2 subsalt wells with a depth of 2,500m will be drilled.

At R-9 block, the analysis of 3D seismic data for 224 sq. km on structure Shokat was completed. The drilled wells 100 (Esbolai), 100 (Masabai), 102 (Kyzylkala), 100 (Kamyskol North) and 100 (Kamyskol South) with depth of 9236m were abandoned for geological reasons.

Due to negative drilling results in 2011, it was decided that all exploration efforts are cancelled in 2012 and detailed feasibility study is made on whether any further work should be done within the block.

At Taisoigan block, the analyses of 3D seismic data for 150 sq. km on Uaz and Kondybai fields were finished. In 2011 drilling of exploration wells 13, 20 at the Kondybai field and well 1 (Bazhir) completed and all wells were abandoned for geological reasons without lowering the production casing.

At the block Taisoigan exploration drilling is planned for 1 well with planned depth of 1300m on the Uaz area in order to identify oil and gas in Triassic sediments. Seismic 3D-MOGT works for 86 sq. km is planned to be performed on Bazhir structure (eastern wing) to revise geological model and discover new targets in Triassic deposits.

In 2012 on Karaton-Sarkamys block drilling of 1 well with a depth of 3,000 m is expected on Keneral structure and 1 well in the eastern wing of Dosmukhambetovskoe field with a depth of 3,500 m. Apart from that, 390 physical tonnes of magnetotelluric depth sounding works is expected as part of studying the block’s geological aspects in 2012 and using the data in comprehensive interpretation of 3D/2D seismic data to enhance the performance of exploratory wells location.

To revise geological model and to determine the perspective of areas on Karaton-Sarkamys block, 160 sq. km of 3D seismic works is planned on structures Severniy, Bulatai and on the northern wing of S. Nurzhanov structure.

At Uzen-Karamandybas block, the drilling of exploratory well on the Bodrai structure with a total planned depth of 2,200 m finished. According to the results 4 objects selected for testing in Middle Jurassic deposits. The well has been abandoned for geological reasons by the results of testing.

To revise geological model of Bodrai structure and other selected structures in the northern and southern parts of the block in 2012, it is planned to conduct 3D-MOGT seismic works and further procession of received data for 715 sq. km.

On Novobogatinsk Western field drilled well 19 with a depth of 2,511m for Permian-Triassic sediments, which is currently in the stage of testing. In 2012 will be drilled the exploratory well 20 with projected depth of 2,600m.

At Zharkamys Eastern-1 in 2011, 610 linear km of 2D seismic and 200 sq. km of 3D seismic works were performed. A presalt well was drilled on Tuskum structure with actual depth of 4,750 m. Currently, the first target is being tested. Acid treatment was also performed for stimulation and the well is currently is being tested.

In 2012 an exploratory well (RА-2-Т) will be drilled with the projected depth of 4,500 m for presalt deposits of Tuskum structure as well as 1,000 linear km of 2D MOGT seismic data processing and re-interpretation along with historical data for the central and western parts of Zharkamys Eastern-1 block.

On the Temir block 975 linear km of 2D seismic data was aquired during the reporting period.

In  2012 on Temir area a gravity survey for 3,500 sq. km is planned with further processing and interpretation.

On the Teresken block, processing and interpretation of 1,000 linear km of 2D seismic data was finished.

In 2012 analysis and summary of 2D seismic processing and interpretation of the results is expected and any further exploration works in the area will be specified.

On the block Fedorovskiy 3 subsalt wells were drilled with total depth of 13,500m, which were transferred to temporary conservation for future testing in 2012. The extension of the test term for drilled wells was due to a gas flaring permission obtained from an authorized body.

Apart from the test of the 3 drilled wells, two wells are expected to be drilled with the projected depths of 4,500m and 5,200m respectively according to Rozhkovskoe field assessment in 2012, which were approved in the 2012 production program. Also planned further processing of 747 sq. km of 3D data and completion of Rozhkovskoe field construction for pilot production.

In December 2011the Company announced the closing of the acquisition of 100% of shares in Karpovskiy Severnyi JSC from GazMunaiOnim in West Kazakhstan region.

In 2012 on Karpovskiy Severniy block it is planned to drill 2 exploratary wells with the projected depth of 5,600m and 5,250m according to contractual obligations, as well as to aquire 335 linear km of 2D seismic works.

In the White Bear area, geological and technical studies were carried out. The program of drilling and testing was approved. Also, it was carried out a partial refund of the area by PL 1722 license.

On the White Bear structure it is planned to drill an exploratory well White Bear West 22/4b-F, with a projected depth of 5,900 meters and acquisition of 3D seismic data on blocks 22/8v, part 22 / 9c for preliminary 106.7 sq. km.

At the S. Nurzhanov field drilling of wells 509 and 707 with a total depth of 5,500 meters was finished. Well 509 is in the stage of testing intervals at 3177-3197m with oil deposit at 47.5 tonnes/day and well 707 was abandoned for geological reasons.

In 2012 it is planned to drill one well for Valanginian deposits in the eastern dome of S. Nurzhanov field with the projected depth of 2,000 m.

At the Western Prorva field the 3,560 m well 402 was drilled, received 108.6 m3/day of oil inflow without water.

In 2012 well 401 with projected depth of 3,500m is expected to be drilled for detailed appraisal works on Triassic deposits.

At the Eastern Makat field well 105 with a depth of 1,501 was drilled for a triassic deposit. The well was abandoned for geological reasons.

According to the approved appraisal works project, well 103 with projected depth of 1,550m is expected to be drilled in 2012.

1 These amounts do not include the 50% share of the expenditures for exploratory drilling on the block Fedorovskiy (KZT2.5 billion - in 2011 and KZT2.5 billion - in 2012), which are stated as «Investments in joint ventures» in the consolidated statement of financial position of KMG EP.