I have mentioned previously my concerns regarding NWZ-2 in respect to how much oil flow can be realistically attributed to its performance and the subsequent income it will provide.
This is vitally important for myself in deciding when/if to re-enter JPR and at what price. Whilst IGV (in ground value) is constantly touted as the yardstick to evaluate value, at some point the oil needs to get out of the ground.
I have listed the expectations of the progress of the well through excerpts from the relevant company announcements, which I invite others to comment.
"Initial drilling target will be a re entry well which is expected to be completed by November 2009 and flow 200 barrels of oil per day."
"The NWZ 2 well was drilled and cased by the Soviets at the same time as they drilled the NWZ 3 well on the adjoining North West Zhetybai (NWZ) oilfield. The owner of NWZ has recently successfully completed the re entry of the NWZ 3 well and has confirmed to JPR that the casing and overall condition of the well was excellent. Based on this feedback, JPR is confident that the re entry of NWZ 2 will be a success, allowing the Company to produce oil by November 2009. The re entered NWZ 3 is currently carrying out production testing and flowing oil at 250-300 bopd and based on the NWZ 2 logs available to JPR, it is expected that NWZ 2 will flow at ~ 200 bopd on production test."
"Logs from the original NWZ 2 well logs indicate a discovery was made with 30m of net sand from the Jurassic flowing oil on test. If the re entry is successful, the NWZ 2 well should flow at least 300 barrels of oil per day and will be on production test for up to 3 months. A production and export licence will then be applied for with oil exports expected to commence in 2Q 2010."
"The owner of the NWZ oilfield has recently successfully completed the re entry of the old NWZ 3 well and has confirmed to JPR that the casing and overall condition of the well was excellent. Based on this feedback, JPR is confident that the re entry of NWZ 2 has a high probability of success, allowing the Company to be producing oil by November 2009. The re entered NWZ 3 located on the adjoining field is currently carrying out production testing and flowing oil at 250- 300 bopd and based on the NWZ 2 logs available to JPR, it is expected that JPRs NWZ 2 well will flow at ~ 300 bopd on production test."
---- Note that "based on the NWZ 2 logs available to JPR" the expectation has risen from 200 bopd to 300 bopd from May. ---
"Assuming successful re entry, the NWZ 2 well will be placed on production testing for a maximum of 3 months before being suspended, pending granting of production and export licences from the Kazakh authorities"
"The total time frame expected to complete all tasks involved in the work over is approximately 70 days, with Kezbi expecting to take around 50 days to complete the actual re entry. Based on this timeline, results from the re entry program are expected sometime during November."
--- Results expected November 2009 ---
15 September 2009 Jupiter Energy commences NWZ 2 re entry program and engages PM Lucas Enterprises to supply drilling, completion and production engineering services for the specification and tendering of the new Akkar N extension well http://www.asx.com.au/asxpdf/20090915/pdf/31kqnmj6nhyp7k.pdf
"In respect of the NWZ 2 re entry program; work has now started on site with the building of the cellar and laying of the concrete slab. Once completed, the work over rig operated by KEZBI LLP will be mobilized and it is expected that the drilling phase of the re entry will commence in late September. The Company will keep shareholders updated on progress on a regular basis after the commencement of the drilling phase."
12 October 2009 Jupiter commences NWZ 2 well re entry
"The Board of Jupiter Energy Limited (ASX: JPR) is pleased to advise that the workover of the NWZ 2 well on Block 31 has commenced. JPR executives Geoff Gander, Erkin Svanbayev and David Thorpe have been on site over the past two days and the current expectation to have the workover completed by the end of October appears to be on track."
"The objective is to successfully re enter the NWZ 2 well and bring it onto production over the coming months."
"Work will be carried over the next 10 days week to complete the workover. Focus this week has been on the delivery and installation on site of the appropriately heated surface equipment in which to store the oil, once it begins to flow to surface. Assuming a successful re entry, the well will be placed on production test for up to 3 months after which time it will be suspended and application will be made to the Kazakh authorities for a trial production licence. Once granted, the sale of oil produced from this well will commence, probably during 2Q 2010."
"Production logging indicates an expected flow rate from the well at ~400 to 500 bopd when in full production."
"Oil samples have been successfully recovered from the well and indications of the well and reservoir performance are positive. Well performance has not been fully appraised because of the current weather conditions and surface equipment restrictions on site, however the flow rate that has been estimated means that the well will be taken into production at what is expected to be a flow rate of approximately 400 to 500 barrels per day (bopd) when in full production. A higher rate has been suggested as being possible but the Board is of the view that from the data available this estimated flow rate is appropriate, until a more detailed performance review is carried out during 1Q 2010."
--- Great news! Or is it? Flow rates are estimates only. ---
"Some further testing will be carried out on NWZ 2 over the next week and then JPR will suspend the well and begin to focus on the planning and site preparation for the drilling of the SV Akkar well, which is now expected to spud in mid December 2009."
--- Suspended? ---
"Once SV Akkar has been drilled, both wells will be put onto production testing at the same time, reducing logistical overheads. Production testing will run for a maximum of 3months during which time JPR will apply to the Kazakh government authorities to approve trial production licences for both wells."
--- Production testing with Sv akkar (now known as j-50) at the same time to save costs. Hmmm, ok ---
(re: J50) "It is expected that mobilisation of the rig will start shortly and that the well will spud in approximately 3 weeks. It is expected to take approximately 1 month to complete the drilling component of the operation with another 3 weeks required to complete the well, including some limited production testing."
"As previously announced, it is then planned to put both the SV Akkar and NWZ 2 wells on extended production testing and work towards the granting of trial production licences for both wells. The expectation is to complete this process by June 2010."
(& in the presentation not in main body of text) "NWZ#2 - 30m of oil on rock. Retested in 2009 ~400 bopd on pump."
"It is JPR's expectation to have both the SV Akkar and NWZ 2 wells both on production testing early in 2Q 2010 (if not earlier), with a view to gaining approval to take both wells into trial production before July 1 2010. It is expected that the cumulative flow rate from both wells with be ~ 1000 bopd."
"Successful re entry of the NWZ 2 well. Well is currently suspended and will be put onto production testing during Q1 2010."
"The NWZ 2 well is currently suspended and will be put onto production test as soon as the current J-50 well activities are complete. Production testing is expected to commence in March 2010 and on completion of production testing the Company intends to apply for a Trial Production licence for this well. A Trial Production licence will enable JPR to sell the NWZ 2 oil into the export market and sales are currently budgeted to commence in July 2010."
"Flow performance of the NWZ 2 well will be determined during the 3 month production test phase and the Company is confident it should perform at a similar level to that of other Soviet era wells that are located on the adjoining oilfield and also producing from the Jurassic."
--- 14 April 2010 Jupiter moves towards completing the J-50 well
--- Ok so J-50 takes a lot longer than anyone could have dreamed of, but they got the job done But now they can re-evaluate timelines and expectations I hope they remembered to turn off the heated surface equipment to store the oil at NWZ2 ---
"Funds will also be committed to installation of dedicated production infrastructure and production testing the NWZ 2 well earlier than budgeted."
"The major milestones and Company objectives brought forward by the placement include: Hiring additional operations personnel to bring forward the schedule for production testing of NWZ-2 well production rates, thereby confirming flow rates from Block 31's 2nd well before June 2010."
"Upgrade from temporary to permanent top side processing and storage infrastructure for both the J-50 and NWZ 2 wells."
"NWZ 2 Well Access to funding from the placement will assist to remove the resource constraints in Jupiters Aktau based operations team and accelerate production testing of the NWZ-2 well. This well has already been successfully re entered and is awaiting being brought onto production testing. An earlier commencement of production testing will in turn enable the Company to increase its Q3 and Q4 2010 export revenues by bringing the NWZ 2 well onto Trial Production earlier than had been budgeted."
"Several outcomes will be brought forward by the placement: Information about flow rates from both J-50 and NWZ 2 will be more timely."
"NWZ 2 Well The North West Zhetybai 2 (NWZ 2) well will be put onto production test as soon as the J-50 product testing process is bedded down and all the key paperwork has been completed. Initial flow rates from NWZ 2 are expected to be announced in June 2010. It is the intention of the Company to have the NWZ 2 well to commence production testing during 2Q 2010 and to be on trial production as soon as possible during 2H 2010. At this stage it is expected the trial production process for NWZ 2 will be completed by September 2010 meaning that during 4Q 2010, JPR will earn export revenues from both the J-50 and NWZ 2 wells."
--- 4 May 2010 J-50 well produces reservoir hydrocarbons to surface during well clean up after successful completion. ---
"Work has also now commenced on bringing the re entered NWZ 2 well onto test production and flow rates from this well will be available in due course. We are now focussed on further production maximisation initiatives for the J-50 well, bringing NWZ 2 onto test production, and finalising our plans for drilling the J-51 well."
"NWZ 2 Well The North West Zhetybai 2 (NWZ 2) well was put onto production test following the completion of preparation of the J-50 well for test production. As anticipated, to maximise production rates it is expected that a submersible pump will need to be installed. Engineering design and contracting for this work has been completed during July with installation planned in August after which the Company will be in a position to confirm an actual flow rate from this well. Like the J-50 oil, oil from NWZ 2 will be sold into the domestic market during its 3 month test production phase. The Company is also currently preparing its application for a Trial Production licence for NWZ 2."
--- ...with installation planned in August after which the Company will be in a position to confirm an actual flow rate from this well. ---
JPR Price at posting:
4.0¢ Sentiment: None Disclosure: Not Held
(20min delay)