Caspian Energy Inc.
TSX : CEK
AIM : CEK

January 23, 2007 09:00 ET

Caspian Energy Inc.: Operations Progress Report

TORONTO, ONTARIO--(CCNMatthews - Jan. 23, 2007) - CASPIAN ENERGY INC. ("Caspian" or the "Company") (TSX:CEK)(AIM:CEK) -

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, AUSTRALIA OR JAPAN

Caspian Energy Inc, an oil and gas exploration company operating in Kazakhstan, today announces that Aral Petroleum Capital LLP ("Aral"), in which the Company holds a 50% indirect interest, has finished drilling its third exploration well, Zhagabulak #303, to a total depth of 4630 meters and encountered approximately 70 meters of net pay in Middle Carboniferous reservoirs. The well will be tested after stimulation, and we anticipate this will be by the end of the first quarter.

Aral has finished a workover of the producing well, East Zhagabulak #213 to remove an obstruction in the tubing, add perforations and acidize the well. The lower zones were acidized, but the upper zones were not due to casing problems. The well is being flowed to the production facility and is producing oil and acid water. While the well continues to clean up the production is unstable, but is showing improvement.

East Zhagabulak #301 is shut in while operations are underway to retrieve wire line and logging tools from the well, which were dropped in the hole when the wire line parted during production testing operations.

East Zhagabulak #302 was re-acidized and no improvement was seen. This well is shut in.

Charles Summers, Chief Operations Officer, Caspian Energy, Inc. commented:

"Zhagabulak #303 was drilled to the Devonian at 5430 m, in the original hole, but unfortunately the rig's surface equipment parted and dropped the drill string. This resulted in the loss of the original hole. The well was cleaned out below the last casing setting depth and then sidetracked. Though hydrocarbon indications were present, in the Devonian, the sidetrack was not drilled to the Devonian as the risk and delay to our drilling program is not acceptable. We were not able to stimulate the entire perforated section in well #213, due to the multiple weights and grades of casing in the well and the resulting packer limitations but we have good results form the intervals that we have been able to stimulate. Production is still unstable, due to the well lifting spent acid water but we expect it to stabilize in the next several days, I am also pleased to announce that Edgar Folmar has accepted the position of Director of Operations for Aral Petroleum Capital. Edgar has over 20 years of experience in oil and gas operations, and over 13 years in Kazakhstan most recently with Shell as Technical Manager for their Kazakhstan operations."

CAUTIONARY NOTE

Some of the statements and information contained in this news release may include certain estimates, assumptions and other forward-looking information. The actual performance, developments and/or results of the Company may differ materially from any or all of the forward-looking statements, which include current expectations, estimates and projections, in all or in part attributable to general economic conditions, and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including oil prices, imprecision of reserve estimates, drilling risks, future production of gas and oil, rates of inflation, changes in future costs and expenses related to the activities involving the exploration, development, production and transportation of oil, hedging, financing availability and other risks related to financial activities, and environmental and geopolitical risks. Further information which may cause results to differ materially from those projected in the forward-looking statements is contained in the Company's filings with Canadian securities regulatory authorities. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

The information in this release has been reviewed by Kenneth Hopkins, AAPG, who is a qualified person for the purposes of the AIM Guidance Note for Mining, Oil and Gas Companies. Mr. Hopkins is Director of Exploration for Aral and a consultant for Caspian Energy Inc., is a qualified geologist and has over 25 years experience in oil and gas exploration and production.

Contact Information

  • Bell Pottinger Corporate & Financial
    Ann-marie Wilkinson/Geoff Callow
    00 44 (0) 20 7861 3232