CanArgo Energy Corporation
OSLO STOCK EXCHANGE : CNR
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CanArgo Energy Corporation

April 16, 2008 17:00 ET

CanArgo Energy Corporation: Well Testing Operations Resume at Manavi 12

GUERNSEY, CHANNEL ISLANDS--(Marketwire - April 16, 2008) - CanArgo Energy Corporation ("CanArgo" or the "Company") (AMEX:CNR)(OSLO:CNR) announces that well testing operations resumed today at its Manavi 12 well in Georgia.

The Manavi 12 (M12) well was drilled to a total depth of 16,762 feet (5,109 metres) in December 2006 having encountered a number of significant hydrocarbon shows throughout the Cretaceous carbonate interval which was the primary target in the well. Initial testing responded with limited flow due to either formation damage or lower than expected permeability, but did produce oil (40.5 degrees API) and gas to surface. It was subsequently decided to acid fracture stimulate a selected reservoir interval and this operation was completed in late January 2008.

Following the acid stimulation, the well was flowed back for a period to recover the frac fluids (spent acid and chemicals). The initial flow-back contained encouraging shows of oil and gas, but the maximum oil cut observed was only 5-7%. It appeared that there was a significant water incursion into the wellbore with no indication as to the source of this excess water. It was noted that following an earlier testing of the well, an oil cut of approximately 50% was observed. Before further testing could be carried out, it was necessary to replace the frac string with proper 2 7/8 inch production grade tubing as planned so as to enable a comprehensive well testing program to be undertaken. This operation involved setting a mechanical plug in the lower completion string so as to isolate and prevent possible damage by well completion fluids to the newly cleaned reservoir, and replace the upper completion. The installation of these components was originally expected to be completed within two weeks, but due to a mechanical failure of the coil tubing unit and subsequent problems with the wireline operation, replacement equipment had to be mobilised to Georgia to complete the operation. This work has now been completed and the well has been returned to flow.

Immediately prior to opening the M12 well to flow, the well head pressure was recorded as 2,200 psi (149.6 atmospheres). The well is currently cleaning up, which may take several days, and is flowing at a rate of up to 1,210 barrels of fluids per day with a flowing well head pressure of 1,885 psi (128.2 atmospheres). The well will be flow tested for a sufficient period through various choke sizes and once flow is stabilized, a wireline-conveyed production logging tool will be run in the well to help locate fluid entry points to the well, attempt to determine the source of the excess water and to evaluate the production characteristics of the reservoir. This testing program is expected to take a number of weeks.

CanArgo is an independent oil and gas exploration and production company with its oil and gas operations currently located in Georgia.

The matters discussed in this press release include forward-looking statements, which are subject to various risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated in such forward-looking statements. Such risks, uncertainties and other factors include the uncertainties inherent in oil and gas development and production activities, the effect of actions by third parties including government officials, fluctuations in world oil prices and other risks detailed in the Company's reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission. The forward-looking statements are intended to help shareholders and others assess the Company's business prospects and should be considered together with all information available. They are made in reliance upon the safe harbour provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company cannot give assurance that the results will be attained.

Contact Information

  • Gambit Hill & Knowlton AS - US and NORWAY
    Eric Cameron
    +47 96 62 55 94
    or
    Gambit Hill & Knowlton AS - US and NORWAY
    Christopher Rodsten
    +47 96 62 55 94
    or
    Gambit Hill & Knowlton AS - US and NORWAY
    Fredrik Tangeraas
    +47 96 62 55 94
    Email: canargo@hillandknowlton.com