Niko Resources Ltd.
TSX : NKO

Niko Resources Ltd.

September 13, 2005 13:52 ET

Niko Resources Ltd.: Operations Update

CALGARY, ALBERTA--(CCNMatthews - Sept. 13, 2005) - Niko Resources Ltd. (TSX:NKO) is pleased to provide the following operations update:

D6 Block India

P1-A well has been completed and the rig moved off location. P1-A was the first well drilled on the newly acquired 3D seismic program. P1-A is the 15th consecutive successful exploration well drilled in D6.

Log analysis indicates several hydrocarbon bearing zones exist over a 600m interval. These hydrocarbon zones have significant impact on the future exploration potential of the D6 block. Hydrocarbons were found in the Pliocene/Pleistocene section, which confirms extension into the deeper water of the geologic environment, which contains all the hydrocarbons discovered to date in D6. Further, the deepest discovered hydrocarbons were found in the older Miocene interval and marks the first time hydrocarbons have been discovered in this time period. This opens up significant additional new exploration potential in the deeper water portions of D6.

Bangladesh

The Chattak 2C data well reached a targeted depth of 612 meters. No drilling problems were encountered. All the well's objectives were met and an optimal relief well using the acquired data has commenced and is currently drilling at 133 meters.

Wireline logs run across the sand that created the initial problem indicate 20 meters of net pay with porosity of approximately 30%. Casing setting depths have been optimized. Reservoir pressure was obtained confirming all formations are normally pressured confirming no reservoir damage has occurred and very little gas was lost.

The 2C well will be completed and put on production after the next relief well is drilled. This is an important discovery with five more deeper sands down to 2800 meters still to be tested.

Niko advises that a lawsuit has been filed in the State of Texas naming Niko and another party as defendants. The action was filed by a number of plaintiffs purporting to be citizens of Bangladesh who claim to have suffered damages as a result of the uncontrolled release of gas that occurred at the Chattak 2 well in Bangladesh in January and June of 2005. The amount of damages claimed in the filed pleadings is US$250 million. With regards to the release of gas in Chattak, misleading statements and quotations in articles by various individuals and publications will be dealt with on an orderly basis.

On September 12, 2005 articles appeared in the Bangladesh press indicating the High Court of Bangladesh asked the Government to freeze all of Niko's Bangladesh Bank Accounts.

Niko has not received at any of its offices, any order to freeze any bank accounts at this time.

However, on the basis of the newspaper article, Niko's Bangladesh bank, Standard Chartered suspended activity on the Niko Accounts. Niko is currently working with the Governments and Courts to lift this suspension.

Niko believes the action taken by Standard Chartered is wholly inappropriate.

In the event that Niko receives a court order freezing bank accounts in Bangladesh, Niko will pursue this matter with the Government.

NEC-25 Block India

Gaffney, Cline & Associates (GCA) were engaged to provide an independent assessment of natural gas resources contained in NEC 25 effective as of March 31, 2005. The findings of the GCA assessment include the exploration results from the six wells drilled by Reliance and Niko in the first original 1,800 km2 area and include analysis of log, production test and subsurface sampling of 12 separate gas accumulations. In addition to completing a review of these discoveries GCA also independently evaluated the range of prospective resources that might be associated with undrilled seismic leads in the first seismic area.

GCA has stated that as yet none of the discoveries in NEC 25 have approved development plans to allow them to be classified as "reserves" under SPE/WPC and National Instrument 51-101 resources classification guidelines.

In its assessment, GCA's best estimate of original gas in place for the drilled discoveries in NEC 25 is 2.3 trillion cubic feet (TCF) (Niko has a 10 per cent gross interest) with a low estimate of 0.8 TCF and a high estimate of 5.5 TCF. In addition, GCA's best estimate of original gas in place for the undrilled prospects in the first seismic area in NEC 25 is 1.4 gross TCF, with a low estimate of 1.0 gross TCF and a high estimate of 2.7 gross TCF for an upside total of 8.2 TCF.

Acquisition of 1,700 km2 of new 3D seismic over the prospective area extending south from the original seismic area is now complete and the data is being processed and evaluated.

September 13, 2005

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.
    Richard Alexander
    Vice President Finance.
    (403) 262-1020