Operational Update

RNS Number : 8198T

Xtract Energy plc

13 December 2011

 



13^th December 2011

AIM: XTR

XTRACT ENERGY PLC

("Xtract" or the "Company")

Operational Update

Xtract Energy PLC is pleased to announce the following operational update ahead of drilling in the Netherlands and Denmark.

Netherlands

As previously announced Chevron intends to drill the P2-10 well on the P2 block using the 'Noble Byron Welliver' jack up drilling rig.  The P2-10 appraisal well targets an existing gas discovery on the P2 block and one of the main objectives is to evaluate commercial hydrocarbon flow rates from an extended reach horizontal well within the Rotliegendes sandstone reservoir.  Xtract has an overriding royalty arrangement of up to 5 per cent of sales value from Chevron and TAQA's share of gas delivered into the Dutch National Transmission System and condensate delivered onshore. 

As previously announced by Xtract on 24^th November 2011, Chevron have advised that the Noble Byron Welliver has completed its current work program in the northern offshore sector of the Dutch North Sea waters and is now being prepared for towing to the P2-10 drilling location.  The rig move requires a suitable weather window to undertake the tow and unfortunately that weather window has not yet occurred. The exact date for the move to location and subsequent positioning for drilling operations has not been confirmed. Chevron would like to complete the rig move as soon as conditions allow and Xtract understands that there are no other reasons for the delay.  Xtract will update the market once it has been advised by Chevron that the well has spudded.  The well program is expected to take up to 100 days.

Denmark

As previously announced, Noreco intends to drill the Luna well on the 01/11 license using the Maersk Resolve jack up drilling rig.  The Luna well will be drilled to a depth of 2,250 metres with a reservoir sandstone thickness prognosis of ca. 90m.  The Luna prospect is targeting between 35mmbbls - 153mmbbls net resources to Xtract.

The Luna prospect is located in a small half graben with the pinch out edge to the south east of the structure.  The Rotliegendes reservoir is thought to have a high probability of being present at this location based on the seismic interpretation.  Uncertainty still exists however on which seismic event represents the top reservoir and where the pinch out occurs.  In addition to the uncertainty on the pinch out position, there is a possibility that the Rotliegendes does not, in fact, pinch out but continues up dip into Lead A.  It is therefore possible that Luna and Lead A are connected and represent one feature.  The current well location which targets the Luna prospect was picked in order to maximize the information gathered by the well and is designed to address this uncertainty.  The Luna well intends to test the overall Rotliegendes play concept.

A full description of the prospectivity of the Danish licenses 1/11 and 2/05 can be found within the Xtract Energy plc AIM Admission Document dated 26^th August 2011 which can be located on the Xtract website www.xtractenergy.co.uk.  A copy of the presentation given to shareholders at the General Meeting of 12^th  September 2011 can also be located on the Xtract website.

As previously announced by Xtract on 24^th November 2011, the Maersk Resolve is currently drilling on contract to Maersk Oil and Gas in Denmark.  The Maersk Resolve is currently located approximately 70 km from the Noble Byron Welliver and as such is experiencing similar weather conditions. The Maersk Resolve has been undertaking a series of well stimulation activities and this requires the attendance and connection of a specialist stimulation vessel. Given the recent weather conditions this has impacted and delayed this activity.

The rig move will require a suitable weather window to undertake the short tow to the Luna location and subsequent positioning for drilling operations.  The move is therefore dependent on weather conditions prevailing at the time of the rig release by Maersk.  Xtract will update once it has been advised by Noreco that the well has spudded. The Luna drilling program is expected to take approximately one month in duration.

Peter Moir, Chief Executive of Xtract Energy, commented:

"Whilst it is frustrating that the P2-10 well has not yet spudded, "waiting on weather" is a very normal occurance in the North Sea, particularly during winter months. I am confident that both processes are on track, and look forward to updating the market in due course."

Qualified Person

In accordance with AIM Guidelines, Peter Moir, B.Sc. Civil Engineering, M.Eng. Petroleum Engineering, UK Chartered Engineer, President of Elko Energy Inc. and CEO of Xtract Energy plc is the qualified person as defined in the Guidance Notes for Mining, Oil and Gas Companies, February 2010, of the London Stock Exchange, that has reviewed the technical information contained in this press release. Mr Moir has more than 30 years experience in technical, operational and commercial aspects of the E&P business.

Enquiries please contact:

Xtract Energy	Peter Moir, CEO Alan Hume FD	[phone] [phone]
Cenkos Securities Plc	Jon Fitzpatrick Beth McKiernan	[phone] [phone]
FTI Consulting	Billy Clegg Edward Westropp Alex Beagley	[phone]

About Xtract Energy

Xtract identifies and invests in a portfolio of early stage oil and gas assets and business interests with significant growth potential. The Company aims to work closely with the associated management teams to achieve critical project milestones, to finance early stage asset and business development activity, and then to finance the asset development phase, or if appropriate to crystallise value for all shareholders at a suitable exit point. Xtract aims to achieve returns for our shareholders through access to the significant upside rewards associated with our investments.

For further information on Xtract please visit www.xtractenergy.co.uk

A short description of the principal assets of Xtract is set out below. These assets are either held directly or through wholly owned subsidiaries of the Company.

Extrem Energy AS ("Extrem Energy")

Xtract holds a royalty interest over the license portfolio currently owned by Extrem Energy, onshore and offshore Turkey.

Elko Energy Inc. ("Elko")

Xtract's wholly owned subsidiary, Elko has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset in the Danish North Sea is a 33% working interest in an exploration and production licence 02/05 and a 33% working interest an adjoining exploration and production license 01/11, close to the prolific Central Graben oil kitchen. Technical work indicates the potential for significant resources on these combined licenses. Elko also holds a royalty interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea.

Zhibek Resources Ltd ("Zhibek Resources")

Zhibek Resources is an oil and gas exploration and production company which has a 72% interest in the Tash Kumyr exploration licence in the Kyrgyz Republic. Xtract has entered a farm-out agreement to fund a seismic and drilling programme for 2008-2011. Xtract owns 25.0% of the issued share capital of Zhibek Resources.

Xtract Oil Ltd ("XOL")

Xtract's wholly owned subsidiary, XOL, is focused on the development of the Company's oil shale resources in Australia and the technology for oil extraction from oil shale resources. Xtract has oil shale exploration rights over mining tenements in the Julia Creek area of Queensland. In addition to evaluating third party technologies, XOL has been developing proprietary technology for the commercial extraction of liquid hydrocarbon products from oil shale.

Xtract Energy (Oil Shale) Morocco SA ("XOSM")

XOSM is a joint venture with Alraed Limited Investment Holding Company WLL, a company controlled by His Highness, Prince Bandar Bin Mohd. Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed a Memorandum of Understanding with the Office National des Hydrocarbures et des Mines for the purposes of evaluation and possible development of an oil shale deposit near Tarfaya, in the south west part of Morocco. Xtract currently holds 70% of the joint venture.

 

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