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Caspian Sunrise - BNG Update and December Production

The Board of Caspian Sunrise is pleased to update the market with developments at its BNG Contract Area, including further progress at Deep Well A5, together with the December 2019 production numbers.


Deep Well A5


As previously announced, after perforation of a 63 meter interval between 4,331 meters and 4,394 meters, we have started to produce oil from Deep Well A5.


The well started flowing without artificial stimulation on 31 December 2019  and has flowed consistently since then, now 10 days.


The oil is light oil of high quality with an API of 37 degrees. As expected the quantities of drilling mud recovered with the oil are declining.


The pressure in the well remains strong and is being maintained at a near constant level by adjusting the choke size.


The adjustments to the choke size impact the quantity of oil recovered and it may be a while yet before we finalise the appropriate choke size to maximise the commercial benefits of the well.  However, based on activity to date, the Company's management continue to believe the well should be capable of producing at least 1,500 bopd.


We have already started to sell oil produced from Deep Well A5 at domestic prices, as allowed under the terms of the BNG licence.


The rig used to drill Deep Well A5 has now been reassigned to assist with shallow well drilling on the MJF structure.


Other Deep Wells


Deep Wells A8, 801 & A6


We are waiting on the results of a chemical analysis to determine the best way to stimulate these wells using high pressure acid treatments.  In particular, we are evaluating using a different acid designed to directly attack the barite mud used to control the wells during the high pressure drilling phase rather than acid used to date, which may be better suited to attacking rock.


Once the results of this analysis are received these wells will receive the appropriate acid treatment.


Deep Wells A9


Following the success at Deep Well A5 we are keen to press on with further deep drilling on the Airshagyl structure. The next deep well there is expected to be Deep Well A9, which, if successful, would extend the perimeter of the Airshagyl structure.


Our intention is to spud Deep Well A9 in the first half of 2020.


Shallow Wells - MJF


A prime focus remains the continued development of the MJF structure.


Existing wells


Production levels from the existing wells remains broadly constant with the improvements following workovers already undertaken being offset by production gaps caused by other wells being taken out of production for workover treatments.


Further details of the December production numbers are set out below.


New wells


We are pleased to report that six new MJF well sites have been prepared for drilling, which avoids this work being undertaken in difficult winter conditions.


Well 150 was spudded in mid-December with a Total Depth of some 2,500 meters. To date the well has reached a depth of 318 meters without incident. We anticipate this well being completed and ready to commence production by the end of February 2020.


The next MJF well to spud is expected to be Well 153, which is planned to be ready to commence production by the end of March 2020.


December 2019 production figures


The total number of barrels produced in December 2019, was 43,498 (November 2019, 41,682) at a daily rate of 1,403 bopd (November 2019, 1,389 bopd).


In December 2019, 64% of oil sold was at export prices and 36% at domestic prices (November 2019, 58% & 42%).


The export price achieved in December 2019, before adjustment for subsequent minor variations, was $59.6 per barrel (November 2019, $55 per barrel) and the domestic price was $18 per barrel (November 2019, $19 per barrel).


The quantity of oil produced during 2019 as a whole, all of which came from the shallow structures at BNG, exceeded 500,000 barrels.


Comments:


Clive Carver, Executive Chairman said


"With 10 days now of constant flow at Deep Well A5, the likelihood of well blockages from excess drilling fluids is receding.


While it may be some time before we settle on the optimum production rate for the well it now seems clear it is capable of producing at a rate of at least 1,500 bopd, a rate greater than the current MJF production from the six existing wells.


More importantly perhaps is that it demonstrates the management's belief that the very large quantities of high quality oil believed to be below the salt barrier are recoverable".

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