Niko Resources Ltd.
TSX : NKO

Niko Resources Ltd.

December 15, 2006 08:55 ET

Niko Operations Update

D6 Block- MA-2 Well Encounters Thickest Hydrocarbon Column To Date In D6

CALGARY, ALBERTA--(CCNMatthews - Dec. 15, 2006) - Niko Resources Ltd. (TSX:NKO) is pleased to announce the MA-2 well has encountered the thickest hydrocarbon column discovered to date in D6. MA-2 reached a TD of 3581m and penetrated a gross hydrocarbon column of 194m consisting of 170m of gas/condensate (53 degrees API) and 24m of oil (42 - 43 degrees API) in the Cretaceous section. MA-2 is located approximately 2 km from the MA-1 discovery well. Application has been made for the commerciality of the MA field and approval is expected to be granted in the near future. The full field development plan will be submitted after approval of the commerciality and the oil development is to be fast tracked with initial production targeted in the 2nd quarter of 2008.

India

The Deepwater Frontier drilling rig has moved to drill development wells for the Dhirubhai gas development project. An addendum to the Field development plan for the Dhirubhai 1 and 3 gas fields has been approved and provides for the gas production rate to be increased to 2.8 BCF per day with a corresponding phase-1 field development costs of US$5.2 billion. Commencement of production is scheduled for mid 2008. The approved field development plan of Dhirubhai 1 & 3 provides flexibility in the critical portions of the facilities to facilitate gas production to 4.2 BCF per day in future as and when additional OGIP & reserves are added.

Since the approval of the initial development plan of Dhirubhai # 1 & 3 in November 2004, substantial additional work has been done to assess the overall hydrocarbon potential of the D6 block in general, and in the development area for Dhirubhai 1 and 3 discoveries in particular. This work included the acquisition of an additional 7600 sq km of 3-D seismic, drilling and testing of additional exploratory wells, drilling and extensive coring of two development wells in the development area, along with various detailed technical studies by international consultants. As a result, the hydrocarbon potential has increased significantly.

Bangladesh

Drilling of the Bangora-4 well commenced in early October 2006 and reached total depth of 4380m (3200m TVDss). The well is 7 km (4.35 mi) south of Bangora-3 and encountered 36 m of reservoir quality sand in the Upper-D interval and confirmed a gas-water contact (GWC) at 3058 m TVDss.

The Company's working interest Proved reserves at Bangora as at 31 March 2006 were 30.2 Bscf and current internal estimates including the drilling successes of Bangora-2, -3 and -4 boost the Company's working interest estimated proved recoverable gas volumes to 118 Bscf, an increase in proved reserves of 291%. The Company's working interest Proved plus Probable reserves at Bangora as at 31 March 2006 were 69.5 Bscf and current internal estimates including the drilling successes of Bangora-2, -3 and -4 boost the Company's working interest estimated proved plus probable recoverable gas volumes to 225.4 Bscf, an increase of 224 %. Commerciality was declared on December 3, 2006 and the Company is entitled to collect the receivable owed for natural gas delivered to date. Current production from Bangora is 60 MMSCFD (40 MMSCFD net to the Company).

Certain statements in this press release are forward-looking statements. Specifically, this press release contains forward-looking statements relating to management's approach to operations, estimates of future sales, production and deliveries, business plans for drilling and development, estimated amounts and timing of capital expenditures, anticipated operating costs, royalty rates, cash flows, transportation plans and capacity, anticipated access to infrastructure or other expectations, beliefs, plans, goals, objectives, assumptions and statements about future events or performance. The reader is cautioned that the assumptions used in the preparation of such information, although considered reasonable by Niko at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Such factors include, but are not limited to: general economic, market and business conditions; industry capacity; competitive action by other companies; fluctuations in oil and gas prices; the results of exploration and development drilling and related activities; the uncertainty of estimates and projections relating to productions, costs and expenses; uncertainties as to the availability and cost of financing; fluctuations in currency exchange rates; the imprecision in reserve estimates; risks associated with oil and gas operations, such as operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the weather in the Company's area of operations; the ability of suppliers to meet commitments; changes in environmental and other regulations; actions by governmental authorities including changes in laws and increases in taxes; decisions or approvals of administrative tribunals; risks in conducting foreign operations (for example, political and fiscal instability or the possibility of civil unrest or military action in countries such as India and Bangladesh); the effect of acts of, or actions against international terrorism; and other factors, many of which are beyond the control of Niko. There is no representation by Niko that the actual results achieved during the forecast period will be the same in whole or in part as those forecast.

Contact Information

  • Niko Resources Ltd.
    Edward Sampson
    Chairman of the Board, President & Chief Executive Officer
    (403) 262-1020
    or
    Niko Resources Ltd.
    Murray Hesje
    VP Finance & CFO
    (403) 262-1020