nbsn, At this stage there has been no indication that there are...

nbsn,

At this stage there has been no indication that there are problems in the field.. if anything the lower depths should give us an indication that all is on track. Take a look at anticipated depths verses actual drill depths. They are progressing nicely and are able to maximise the Rig..

Since drilling recommenced, Mailisu III #3 and #4 have been drilled and will shortly be completed as oil producers following significant oil recoveries from Beds V and VII. Leases have been prepared for the final 2 wells at Mailisu III and should be drilled and completed by mid 2008.

The Mailisu III story

The Mailisu III oilfield is enigmatic (fig 2). It has produced over 700,000bbls of oil from an area with no apparent structural closure to provide a trap. Meanwhile, up-dip from this production, there have been numerous intersections of oil – in stratigraphic holes, one low-rate producer and 6 gas wells which were drilled to produce from deeper zones.

The oilfield is difficult to explore with few areas where wells can be drilled due to the terrain and housing on the more level areas. Consequently there has been no seismic recorded over the field and large areas have not been drilled. The purpose of Caspian’s current drilling programme is to appraise the extent of the field and well deliverability. On completion of an initial 6-well programme, a decision will be made as to how best to develop the field.

With the lack of seismic coverage, a model has been developed whereby the northern (critical dip-direction) flank is thrust-faulted (Figure 3). A series of thrust faults appear to have created a number of the oil traps in the region including the large Mailisu IV field (located directly south of Mailisu III) which has produced over 40mmbls to date.

COG Mailisu III #3 spudded on January 2, 2008 and reached to a total depth of 675m on March 19. Good oil shows were recorded over Bed V with significant oil recovered in the drilling fluids. The well was cased and suspended as a future oil producer. Drilling of the well was delayed when the cold weather forced the suspension of drilling from soon after spud until late February.

COG Mailisu III #4 spudded on April 4, 2008 and has reached the target depth of 675m on 29 April. Good oil shows were reported in both Beds V and VII.

In addition to the drill targets included in Caspian’s current eleven-well programme, reprocessing of seismic by Santos has identified further leads with shallow (less than 1,000m) potential on the Charvak and East Mailisu blocks which will be followed up at a later stage.

To date only Mailisu III #1 has been production tested. Over a period of 40 days the well has produced about 6 bopd. This is lower than initial expectations and further work will be done to optimize the well’s production.

Mailisu III #2 will only be tested when a suitable gas wellhead is acquired. Mailisu #3 and #4 will be perforated and production tested in early May.

Interpretation of Results to Date

The model for Caspian’s Mailisu III lease area, developed by the Company, has been enhanced by the exploration drilling programme. Mailisu III #1 well was located on the northern (critical dip-direction) thrust-faulted flank which is interpreted by the Company as a limit to the field.

From an oil perspective the COG Mailisu III #1, #2 and #3 wells confirmed the presence of moveable oil. In all wells the reservoir section and quality was consistent. While still not conclusive in terms of ultimate potential, initial flow rates from the #1 appear to be a lowside case.

Based on these estimates a conceptual development has been assessed. Should commerciality be confirmed from the current drilling programme, the plan would entail drilling further production wells in the field. This development based a total of 20 producing wells with an initial rate of between 5 to 50bopd would see a production of between 69,000 to 127,000bbls within 18 months.


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