Caspian Energy Inc.
TSX VENTURE : CKZ.H

Caspian Energy Inc.

September 24, 2014 14:18 ET

Production Resumes in Kazakhstan, Caspian Reports

CALGARY, ALBERTA--(Marketwired - Sept. 24, 2014) - Caspian Energy Inc. (TSX VENTURE:CKZ.H) ("Caspian") Chairman Michael Nobbs is pleased to announce that on September 19, 2014, oil production was reinstated at the East Zhagabulak field in Kazakhstan by Aral Petroleum Capital LLP ("Aral"). Caspian currently owns a 40% interest in Aral.

Production Wells

On the first day, oil flowed from East Zhagabulak (EZ) well #301 at a rate of 101 barrels per day under reservoir pressure. Over the course of the first three days, September 19-21, 2014, wells #301, #306 and #315 performed satisfactorily with a total production of 2,766 barrels. On September 21, 2014, the total daily flow rate reached 1,408 b/d during the test. Wells #301, 306 and #315 recorded a production rate of 439 b/d, 517 b/d and 451 b/d respectively. Well productivity benefits from high incidence of gas which has accumulated during the long period of shutdown. So far, the average water content remains at approximately 3%.

Mr. Nobbs said that total production from the three producing wells in the East Zhagabulak field could maintain at approximately 1,300 barrels per day for the next month, although this cannot be guaranteed. The oil produced is being trucked to Caspineft TME at a distance of 30 km for processing. "For a company of our relative size, the return to production, more important, to this level of production is significant and ensures that Aral has an improved cash flow," said Nobbs.

Production at East Zhagabulak has been shut in since January 1, 2013 due to a combination of regulatory and technical issues. EZ #301 was shut in due to newly proclaimed gas flaring limits. Upon receipt of the flaring permit and, more recently, the permit for emissions into the environment, Aral was able to re-commence production from the field.

"This is the latest of several important steps that Caspian has made in recent weeks," Mr. Nobbs said. "On closing of Caspian's share purchase agreement transaction announced on August 1, 2014, we expect to have a new partner with cash to fund exploration. As well, Aral is returning its three wells in East Zhagabulak to full production and has an exploration program under way."

Calgary-based Caspian currently owns 40% of Aral Petroleum, the operating entity in Kazakhstan. Aral holds a 25-year production contract for East Zhagabulak and an exploration contract for the wider North Block property, an area of approximately 1,467 square kilometers that includes East Zhagabulak, portions of the Sakramabas trend and several other prospective sites.

Background

Caspian is an oil and gas exploration and development company, operating in Kazakhstan where it has a number of targets in the highly prospective Aktobe Oblast of Western Kazakhstan. The Company holds an exclusive licence, which entitles it to explore and develop certain oil and gas properties known as the "North Block," an area of 1,467 square km, and a production contract ("Production Contract") for the area known as "East Zhagabulak," through its interest in Aral. The Production Contract was entered into on July 28, 2010 with the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan ("ROK") relating to the East Zhagabulak field (the "License Area") in the Aktobe oblast of the Republic of Kazakhstan. The Production Contract provides Aral with the exclusive right, over a 25 year term, to extract hydrocarbons from the License Area. Aral is obliged to carry out operations on the License Area in accordance with the requirements of the Production Contract, which, among other things, stipulates minimum levels of involvement for Kazakhastani personnel, the process for approval of work programs and the need to comply with environmental and other requirements. Pursuant to the Production Contract, Aral is obliged to sell at least 20% of its production to the ROK on an annual basis, and the ROK has the pre-emptive right to purchase hydrocarbons at below-market prices. In addition, Aral is required to spend certain amounts on local development and maintain a reserve remedial fund. The ROK has certain pre-emptive and other rights under the Production Contract, including the right to requisition the hydrocarbons in the License Area in certain circumstances.

Cautionary Note:

Forward Looking Statements - This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation which we refer to herein, collectively, as "forward-looking information". Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Caspian's actual performance, developments and/or results may differ materially from any or all of the forward-looking statements. Further information which may cause results to differ materially from those projected in the forward-looking statements is contained in Caspian's filings with Canadian securities regulatory authorities. All material assumptions used in making forward-looking information are based on management's knowledge of current business conditions and expectations of future business conditions and trends. Although Caspian believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Caspian does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the NEX) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Caspian Energy Inc.
    Michael Nobbs
    Chairman of the Board of Directors
    310-923-5032

    Caspian Energy Inc.
    Brian Korney
    Acting Chief Executive Officer and Chief Financial Officer
    403-513-3375