Third quarter 2007 oil production and exploration update
Daily oil production reached new record levels of 34,500 barrels per day by the
end of the third quarter 2007. Total third quarter oil production amounted to
2,824,704 barrels (2,363,270 barrels), and the average daily production for the
quarter increased to 30,703 barrels per day (25,688 barrels per day). Total oil
production for the nine months ended September 30, 2007 amounted to 7,507,062
barrels (5,537,876 barrels).
The 2007 production plan of 11 million barrels was reconfirmed with a fourth
quarter production target of 3.5 million barrels.
Average gross oil prices received in the third quarter 2007 increased to
approximately USD 46 per barrel from USD 40 received in the second quarter 2007.
The increase in gross prices resulted in average third quarter netbacks, after
transportation costs, preliminarily improving to USD 34 per barrel from USD 31
in the second quarter.
Tomsk region
Total production in the Tomsk region for the third quarter 2007 was 961,488
barrels (861,053 barrels). 7 workovers were accomplished at existing wells.
The 2007 drilling program at the Kluchevskoye field was completed. In the third
quarter, 3 new wells were drilled and a total of 5 wells were put into
production. The water injection system is fully operational with 4 wells
employed to maintain reservoir pressure. Hydro fracturing was successfully
performed, resulting in increased flow rates from 4 wells. The field
development activities have resulted in a reassessment of the reservoir
structure and its size. The area of the deposit is expected to be significantly
larger than previous assessments and net oil pay also largely exceeds prior
determinations.
The 2007 drilling program at the Puglalymskoye field was also completed. In the
third quarter, 6 producing wells and 2 water supply wells were drilled. 7 new
wells were put into production. 4 of these were hydro fractured prior to
production start. 3 more wells are being completed.
At the Middle-Nyurola field, well no 137 is being sidetracked with completion
planned for the fourth quarter 2007.
At the Khvoinoye oil field, drilling equipment has been mobilized and is
currently being assembled. Drilling is scheduled to start in October 2007.
Timano-Pechora region
Total Timano-Pechora region oil production for the third quarter 2007 increased
to 924,848 barrels (737,593 barrels).
Mr Alexander Ivanov was appointed as General Director of Pechoraneft, the
group's operating subsidiary in the Timano-Pechora region. Mr Ivanov replaced
Vladimir Revyakin and will primarily be responsible for the continued execution
of the drilling program and for improving efficiency in the region. Mr Ivanov
previously held positions as Chief Engineer and General Director of several
Russian oil and gas companies including TomskNeft, YakutGAZPROM, and Russneft.
At the Middle-Kharyaga field, 16 workovers were accomplished in the quarter.
Development of the North Kharyaga and Lek-Kharyaga fields continued in the third
quarter. The 3D seismic and geological model updates for the Lek-Kharyaga and
North Kharyaga fields were completed. In the fourth quarter, oil reserve
increases and new Devonian prospects with resources will be evaluated by
independent petroleum engineers.
At the North-Kharyaga field, 4 new producing wells were drilled, 4 wells were
put into production (including one transient well from the second quarter) and
one well is planned to be completed in October. The initial flow rates from
each of the first 3 wells confirmed expectations of 1000 barrels per day.
Recent wells have been underperforming due to unsatisfactory well completions
and acid treatment procedures. The new regional management is taking actions to
improve completions and flow rates.
At the Lek-Kharyaga field, 3 wells were drilled, 2 out of which were put into
production at flow rates significantly exceeding projected rates.
Treatment and metering facilities at the North-Kharyaga` and Lek-Kharyaga fields
were completed. At the Kolvinskoye field, engineering surveys were executed to
determine future locations of oil field facilities and pipelines routes for
connection to the national Transneft system.
Volga-Urals region
Total Volga-Urals oil production for the third quarter amounted to 938,368
barrels (764,625 barrels). 20 workovers were performed on existing wells in the
quarter.
The Kochevnenskoye field's oil treatment facility is operating at full capacity,
which limited and delayed production increases in the third quarter as well. In
the quarter, capacity constraints resulted in production reductions of
approximately 31,000 barrels of oil with two wells shut in. The oil treatment
facility is being upgraded: as of now its capacity has been improved from 5.6 to
8.8 thousand barrels per day. The capacity is planned to increase up to 10.8
thousand barrels per day by the end of the year.
At the Kochevnenskoye field, well no 111 was drilled and will be put into
production in the fourth quarter. The drilling of another producing well has
been started. At the West-Kochevnenskoye field a new well, no 10, was drilled
and put into operation.
At the Kovalevskoye field, exploitation well no 2 was tested at a flow rate of
650 barrels per day. A pipeline was constructed connecting the field to the
Kochevnenskoye field oil treatment plant.
Following recent interpretation of 3-D seismic, the areas of the
Kochevnenskoye, West-Kochevnenskoye, Solnechnoye and Kovalevskoye fields have
been defined more precisely. The 3-D seismic results will be presented to the
independent petroleum engineers performing the annual review and upgrade of the
group's total oil reserves.
The Solnechnoye oil field development plan was approved by the Central Reserve
Commission of the Russian Federation in August 2007 following which 2 wells were
put into production in the field.
For further information:
Maxim Barski, Managing director, West Siberian Resources Ltd., tel. +7 495 956
48 82
Eric Forss, Chairman, West Siberian Resources Ltd., tel. +46 70 523 86 62
Also visit www.westsiberian.com
West Siberian Resources Ltd is an independent oil company active in Russia. West
Siberian´s depository receipts are traded at the Stockholm Stock Exchange's
Nordic list under the symbol WSIB.
