Caracal Energy Provides Operational Update

Caracal Energy Provides Operational Update

New Discovery at Krim & Spudding of Bitanda Exploration Well

Production Surpasses 11,000 bopd

2014 exploration program targeting one billion barrels

CALGARY, Dec. 9, 2013 /CNW/ - Caracal Energy Inc. (LSE:CRCL) ("Caracal Energy"
or the "Company") provides an operational update on its activities in Chad,
which includes announcing a new discovery at Krim and the spudding of the
Bitanda exploration well.

Executive Summary

·                     Production ramped up significantly, delivering in excess
of 11,000 gross barrels oil per day ("bopd")

·                     On track to achieve first oil lift in Q1 2014 and
significant production increases in the coming months

·                     Mangara-5 development well delivered highest test flow
rates seen on the Mangara field; completed as a producer. Maximum combined
production rate for the Cretaceous C and E sands exceeded 5,000 bopd

·                     Krim-1 Cretaceous E sands flow tested at up to 2,580 bopd

·                     Successful test of Krim's Cretaceous C and D sands should
deliver an increase in reserves

·                     Bitanda exploration well spudded; targeting gross
unrisked prospective resource of 277.2 - 648.3 million barrels ("mmbbl")

·                     Mobilization underway to increase drilling rig count from
2 to 6 rigs by end 2014

·                     2014 exploration program will target 1 billion barrels of
gross unrisked prospective resources

Gary Guidry, Chief Executive Officer, said:

"We are on schedule for first revenue which is expected in Q1 2014. Our team,
along with partners GlencoreXstrata and Société des Hydrocarbures du Tchad,
have done an exceptional job of establishing continuous production into the
ETS. Our development drilling and construction of additional facilities and
transportation infrastructure has also continued, and we are on track to
provide additional production from Badila and Mangara fields in the coming
months.

In addition to the significant production increases expected next year, we plan
to test over a billion barrels in unrisked prospective resources in 2014
through our high impact exploration program."

Production

Since achieving first oil on September 30, 2013 the Company completed the
commissioning and site acceptance testing of the lease accounting custody
transfer metering ("LACT"). The LACT measures oil quality and volume, prior to
delivery into the Export Transportation System ("ETS") operated by TOTCO/COTCO.
Since completing the commissioning the Company has ramped up production
significantly, and recently, continuously delivering in excess of 11,000 bopd.

Highlights of recent production performance are as follows (all gross amounts):

·                     255,778 gross barrels of oil delivered during November

·                     354,530 gross barrels of oil delivered into the ETS as of
December 7, 2013

·                     November 2013 average production of 8,526 bopd

·                     11,124 bopd current production; averaged 11,138 bopd last
10 days

Current production is being used for pre-revenue pipeline fill line, now 76%
per cent complete, and the Company is on track to achieve its first lifting of
oil in Q1 2014.

Additional fluid processing and shipping facilities are currently being
commissioned with additional production from the Badila field scheduled to come
on stream this month. Caracal Energy expects significant further increases in
production during 2014 from Badila as well as from the nearby Mangara field.

Exploration and Development

The Company has commenced the mobilization process for an additional four
drilling rigs, bringing the total rig count to six drilling rigs by the end of
2014. In addition, two completion rigs will be mobilized during 2014, bringing
the total completion rig count to three.  In total, the Company anticipates
targeting over a billion barrels of unrisked prospective resources in 2014.

Krim: Exploration well a new discovery

Krim exploration well ("Krim-1") was declared a discovery on November 4, 2013.
The Krim field is located immediately southwest of the Mangara field, and the
targeted zones were the Cretaceous C, D and E sands.

Due to the proximity to infrastructure, the Company and its partners believe
they can fast track Krim's development. Depending on routing, Krim-1 is
approximately 5-10 kilometers from the pipeline at Mangara.

Pre-drilling, Krim gross unrisked prospective resource as per McDaniel &
Associates Ltd. resources evaluation dated June 30, 2013 ("McDaniel Resource
Report") were 29-64 mmbbl on unrisked Pmean and P10 basis, respectively.

The Cretaceous E sands were tested at up to 2,580 bopd over the following
intervals:

 Interval    Maximum   Flowing Choke Total Flow  Gas-Oil  Gravity  Productivity
   (mKB)       Oil       WHP   Size   Duration    Ratio     (Deg      Index    
               Rate    (psig)  (in.)    (hr)      (scf/     API)    (bopd/psi) 
              (bopd)                               stb)                        
                                                                               
E (2,581.5    2,580      120   64/64    28.8       100    34 - 37      4.3     
     -                                                                         
  2,630)                                                                       
                                                                               

The McDaniel & Associates Ltd. reserves evaluation dated September 30, 2013
("McDaniel Reserves report"), attributed gross 2P reserves of 6.0 mmbbl to
Krim's E sands, with gross 3P reserves of 10.1 mmbbl.

The well was suspended following the Cretaceous E sands test, as the completion
rig was required to test and complete Badila-4 (below) for production. The
completion rig has now returned to Krim to complete the testing of the
Cretaceous C and D sands later this month. The estimated pay from petrophysical
information is 45.5 meters for the C sands and 105 meters for the D sands. 
Upon a successful test from the C and D sands, the Company expects an increase
in reserves as currently no reserves are assigned to these sands. This will
require the construction of a 5-10 km tie-in to the existing Mangara-Badila
pipeline.

Bitanda: Exploration Well

The Bitanda exploration well ("Bitanda") was spudded on December 5, 2013. The
planned total drilling depth is 2,390 meters and drilling is expected to take
32 days. The current operation is drilling at 700 meters.

Bitanda is the third exploration test well following the recent success at Krim
and the Cretaceous E sands in the Mangara field. Bitanda was recently confirmed
as a structural three-way closure, bounded by the basin margin fault using the
3D seismic shot earlier this year.  Pre-drill, McDaniel Resource Report
estimated gross unrisked prospective resource of 277.2-648.3 mmbbl on unrisked
Pmean and P10 basis, respectively.

Bitanda is approximately 19 kilometers from the Badila field, and pipeline
connection.

Mangara-5: Combined Development and Exploration Drilling

The Mangara-5 well was spudded on May 16, 2013 and drilled to a total depth of
3,339 meters. The primary objective of the well was to deliver production from
the Cretaceous C sands. The secondary objective was to flow test and evaluate
the prospective resource of the Cretaceous E sands, located in the eastern
fault block of the Mangara field. Pre-drill McDaniel Resource Report attributed
gross unrisked prospective resource of 24.6-58.0 mmbbl on Pmean and P10 basis,
respectively, to the eastern fault block.

Prior to completing the well as a Cretaceous C sands producer, well testing
confirmed the light oil production potential of the Cretaceous E, with testing
results as follows:

   Interval      Maximum  Flowing Choke Total Flow Gas-Oil Gravity Productivity
     (mKB)         Oil      WHP   Size   Duration   Ratio   (Deg      Index    
                  Rate    (psig)  (in.)    (hr)     (scf/   API)    (bopd/psi) 
                 (bopd)                             stb)                       
                                                                               
  E (2,474 -      1,917     160   64/64     53       100   35 - 39     1.7     
    2,669)                                                                     
                                                                               
  C (1,896 -      3,200     200   80/64    45.3      540   35 - 37     2.2     
   2,103.5)                                                                    
                                                                               

The test rates from both the C and E sands are the highest test rates achieved
by the Company and past operators to date on the Mangara field. The well has
been initially completed as a Cretaceous C sands producer. Caracal's net
interest in the Mangara field is 50%.

Mangara-6: Combined Development and Exploration Drilling

The Mangara-6 well was spudded on November 19, 2013. The planned total drilling
depth is 3,302 meters and drilling is expected to take 50 days. The current
operation is coring the Cretaceous C sands at 2,081 meters.

Mangara-6 has a primary objective of developing Probable reserves in the
Cretaceous C sands. After the recent exploration success of the Cretaceous E in
Mangara-5, the Mangara-6 well will be drilled to basement to test additional
prospective resources in the western fault block of the Mangara field. 
Pre-drill, McDaniel Resource Report estimated gross unrisked prospective
resource for the western fault block of 14.5-35.2 mmbbl on Pmean and P10 basis,
respectively.

Kibeaand Beche: Seismic Acquisition

The Company has started mobilizing a seismic contractor to shoot 2D and 3D
seismic.  Much of the planned 1,500 line-kilometers of 2D seismic will be
focused on well placement for structures to be drilled in the 2014-2016
exploration programs as well as identifying additional prospects currently not
captured in the Company's estimates.

Of the planned 700 square kilometers ("Km2") planned for 2014, 400 Km2 will be
focused on the Kibea discovery and nearby Beche exploration area, which
includes three prospects similar to the discovery at Kibea. Kibea is a light
oil discovery (33 - 35 degrees API) with 45.9 mmbbl of gross 2P reserves, and
105.0 million barrels of gross 3P reserves according to the McDaniel Reserves
Report1. According to the McDaniel Resource Report, gross prospective resources
below the Kibea discovery are 20.0-38.4 mmbbl on Pmean and P10 basis,
respectively.

The nearby exploration prospects Beche, Beche-B and Beche-C have gross unrisked
prospective resource estimates as follows:

Prospect   P90     P50    Pmean    P10  
         (MMbbl) (MMbbl) (MMbbl) (MMbbl)
                                        
Beche     38.8    116.1   169.7   358.0 
                                        
Beche-B   25.4    79.3    116.8   244.2 
                                        
Beche-C   32.7    95.9    141.5   300.8 
                                        
TOTAL                     428.0         
                                        

Logistics preparation and execution is underway to move a drilling rig to the
Kibea - Beche area by May 2014 to drill 3-4 wells by November 2014. Beche is on
the proposed pipeline route to develop the Kibea field.

Badila-4: Development drilling

The Badila-4 appraisal well was drilled to a total depth of 2,272 meters and
suspended for testing and completion. As petrophysical information from the
primary target Cretaceous D was preliminarily interpreted as disappointing, the
McDaniel Reserves Report required for the recent financing, assumed the well
would be wet (100% water) and downgraded Cretaceous D sands reserves
accordingly.

Subsequent to the McDaniel Reserves Report, the testing results of the
Cretaceous D sands is as follows:

  Interval     Maximum  Flowing Choke Total Flow  Gas-Oil  Gravity Productivity
    (mKB)        Oil      WHP   Size   Duration    Ratio    (Deg      Index    
                Rate    (psig)  (in.)    (hr)      (scf/    API)    (bopd/psi) 
               (bopd)                               stb)                       
                                                                               
  D (1841 -      234       5    64/64     51        Not      37        2.5     
    1893)                                         measured                     
                                                                               

This encouraging test will be used to re-evaluate the potential D sands oil
reserves in the Badila-4 area as a part of the yearend reporting cycle.

An encouraging new secondary oil zone in the Upper Cretaceous A sands was also
tested in Badila-4. This zone has been extensively mapped in the Badila field
development area using the new 3D seismic information, and Badila-4 is the
first test of this new reservoir.

The testing results of the Upper Cretaceous A sands are summarized below:

  Interval     Maximum  Flowing Choke Total Flow  Gas-Oil  Gravity Productivity
    (mKB)        Oil      WHP   Size   Duration    Ratio    (Deg      Index    
                Rate    (psig)  (in.)    (hr)      (scf/    API)    (bopd/psi) 
               (bopd)                               stb)                       
                                                                               
  A (1017 -      743      45    48/64     58        Not      22        2.5     
    1040)                                         measured                     
                                                                               

The A sands are located at approximately 1,030 meters and will be lower cost to
develop.  The well was subsequently completed for production from the Upper
Cretaceous A.

Badila-5: Development drilling

The Badila-5 well was drilled to a total depth of 2,066 meters. Company
analysis of the petrophysical results from the well suggests net pay of 64.4
and 58.4 meters in the Cretaceous C and D sands, respectively.

The testing results of the Cretaceous C sands are as follows:

   Interval     Maximum  Flowing Choke Total Flow  Gas-Oil Gravity Productivity
    (mKB)         Oil      WHP   Size   Duration    Ratio   (Deg      Index    
                 Rate    (psig)  (in.)    (hr)      (scf/   API)    (bopd/psi) 
                (bopd)                              stb)                       
                                                                               
  C (1,441 -     3,114     155   64/64     58        26    34 - 35     18.1    
    1,497)                                                                     
                                                                               

The well was subsequently completed for production from the Cretaceous D, and
with artificial lift-assist expected to produce in excess of 5,000 bopd. Both
Badila 4 and 5 are expected to commence production before year-end.

Construction Projects

MangaraDevelopment

The 97 kilometers of 12" oil and 6" natural gas shipping pipelines from Mangara
to Badila are nearing completion. Final hydro testing is expected to be
completed by the end of December. Accommodation for the approximate
10-kilometer natural gas spur pipeline, to supply the new natural gas powered
electrical generation station for the city of Moundou, is in place.  The spur
will be completed in 2014 as an integral component of the electrical power
generation construction and commissioning project.

Commissioning of the Mangara field central processing facility ("CPF") and the
southern processing terminal ("SPT") is underway. The SPT is scheduled to be
completed during December and will temporarily process additional Badila crude
oil until the Badila expansion is completed and the Mangara field is brought on
stream during the first half of 2014.

Blending and Shipping Terminal

Commissioning of the blending and shipping terminal is underway, and expected
to be on-stream in December. The terminal is owned and operated by PetroChad
Transportation Company ("PCT"), which is owned by Caracal Energy (66 2/3%) and
GlencoreXstrata (33 1/3%).

PCT operates under an Inland Transportation Authorization, as prescribed in the
Production Sharing Contracts. The terminal will be able to blend and ship
25,000 bopd until the second half of 2014, when the expansion to 50,000 bopd
will be completed.

About Caracal Energy Inc.

Based in Canada, Caracal Energy Inc. is an international exploration and
development company focused on oil and gas exploration, development and
production activities in the Republic of Chad, Africa. In 2011, the Company
entered into three production sharing contracts ("PSCs") with the government of
the Republic of Chad. These PSCs provide exclusive rights to explore and
develop reserves and resources over a combined area of 26,103 km2 in southern
Chad. The PSCs cover two world-class oil basins with oil discoveries, and
numerous exploration prospects.

The Company's shares trade on the London Stock Exchange under the symbol CRCL.


Cautionary Statements

Certain information in this press release constitutes forward-looking
statements under applicable securities law. Any statements that are contained
in this press release that are not statements of historical fact may be deemed
to be forward-looking statements. Forward-looking information and statements
are often, but not always, identified by the use of words such as "anticipate",
"seek", "believe", "expect", "hope", "plan", "intend", "forecast", "target",
"project", "guidance", "may", " might", "will", "should", "could", "estimate",
"predict" or similar words or expressions suggesting future outcomes or
language suggesting an outlook. Specific forward looking statements included in
this press release include comments related to the expected timing of pipeline
completion and facilities advancement; potential production rates; timing of
the pipeline-fill and tie-in for production; expected completion of well
servicing operations; additional development of the Mangara and Badila field;
expected drilling of the other prospects; and other matters. Subject to
applicable securities laws, the Company does not undertake any obligation to
revise this forward-looking information or these forward-looking statements to
reflect subsequent events or circumstances. The forward-looking information and
statements contained in this press release are expressly qualified by this
cautionary statement. Well-test results and production rates are not
necessarily indicative of long-term performance or of ultimate recovery.

_________________________
1 McDaniel Report effective September 30, 2013

 

 

SOURCE: Caracal Energy Inc.

For further information:

Caracal Energy Inc.
Gary Guidry, President and Chief Executive Officer
Trevor Peters, Chief Financial Officer
403-724-7200

Longview Communications - Canadian Media Enquiries
Alan Bayless
Joel Shaffer
604-694-6035
416-649-8006

FTI Consulting - UK Media Enquiries
Ben Brewerton / Ed Westropp / Georgia Mann
+ 44 (0) 207 8313 3113
[e-mail]

(CRCL)