almost time to start happening, page-23

A interesting little China update snuck in by HZN today...

EXPLORATION DRILLING PROGRAM UPDATE – BLOCK 22/12, BEIBU GULF,
OFFSHORE CHINA (HZN INTEREST 30%)
Horizon Oil Limited advises that as at 0600 hours this morning the second well in its
exploration drilling program in Block 22/12, offshore China, the Wei 6-12E-1A, was at a depth
of 986 mBRT and performing a wiper trip in 17½” hole, prior to running 13-3/8” casing. The
well, which spudded on 12 February 2008, will test a structural-stratigraphic prospect
approximately 1.7 km east of the Wei 6-12S oil discovery (see map below) and is being drilled
with the Premium Murmanskaya jack-up rig. The well had to be re-started after the drill string
became stuck while drilling the initial 17½” hole, resulting in delays.
In the last update of 13 February 2008, shareholders were advised that on a trouble free basis the
well should be at total depth of 2,520 mBRT by around 22 February 2008. This prognosis was
made with the intent of keeping informed the holders of Horizon Oil Limited listed options
(ASX Code: HZNO) which expire on 28 February 2008. Based on the drilling progress
reported above and the estimated time required to set casing and drill to total depth, it is highly
unlikely that results for the well will be in hand by 28 February 2008.
The Wei 6-12E-1A well is the second well to be drilled in a program which targets mapped
prospects with aggregate potential in excess of 200 mmb oil-in-place. All prospects have been
defined with 3D seismic. The third well will appraise the Wei 12-2-1 discovery in the
southwest of the block which tested over 2,000 bopd oil from three separate sands in the Eocene
Liushagang Formation. The location of the fourth well will be dependent on results of the first
three and may have an appraisal / step out objective.
The overall objective of the exploration drilling program is to test the most prospective
remaining structural and stratigraphic anomalies in Block 22/12 in order to establish and retain
extended appraisal / development areas over discoveries prior to scheduled relinquishment of
the residual exploration permit area in late- 2008.
Commercial discoveries which may result from the program are anticipated to represent high
value satellite fields, complementing the 50 - 60 mmbo 2P reserves (200 mmb oil-in-place)
already identified in four fields within Block 22/12, including the Wei 6-12 South and Wei 6-12
discoveries, which are now the subject of reserves certification and development approval
processes. Good recent progress has been made on both these processes. The Block 22/12
development concept is to establish a facilities hub with off-take in the Wei 6-12 area and
thereafter tie-in the previously discovered satellite fields to the south and, subject to the
outcome of the current exploration program, new discoveries which should be developed at
relatively low incremental cost.