* PIPELINE TO TOMSKAYANEFT COMPLETED
* RECENTLY IDENTIFIED OIL LAYER, JURA 10, PROVEN PRODUCTIVE
* HYDRO FRACTURING EXPECTED TO INCREASE PRODUCTION TO 4,500 - 6,000
BARRELS PER DAY
Malka Oil has completed the construction of the new oil pipeline to
Transneft via Tomskayaneft. The connection will mean cost savings
as well as an increase of Malka Oil's delivery capacity. At the
same time the already identified new oil layer Jura 10 has proved
to be productive in three wells. The work with hydro fracturing is
proceeding and as of today nine out of the planned 16 wells have
been finished and will start to produce in April. Winter roads have
already started to degrade and therefore the remaining seven wells
will be completed in May and June when new summer roads to the well
sites are ready. The work will be completed in June and the oil
production is expected to increase to around 4,500 barrels per day
before the end of May and up to 6,000 barrels per day by the end of
June. This came to light during an investor trip today at the
company's oil field in Tomsk, Western Siberia.
Pipeline to Tomskayaneft
The new pipeline from the oil fields to Tomskayaneft complements
the existing distribution channel which today is done via pipeline
combined with road transportation. The new pipeline will be
commissioned at the end of May."Connecting to Tomskayaneft gives us a second indirect distribution
channel into Transneft. It means higher delivery capacity as well
as increased operational reliability than our existing solution.
This additional connection gives us the possibility to distribute
the higher production volumes that will follow the ongoing
hydrofracturing" says Malka Oil's Managing Director, Fredrik
Svinhufvud from the Zapadno-Luginetskoye field in Western Siberia
Hydro fracturing
The first results from the hydro fracturing programme, which means
that hydrocarbon bearing rock formations are cracked under high
water pressure, indicates that Malka Oil's new production levels
will be around 4,500 per day before the end of May and thereafter
further increase towards 6,000 barrels per day at the end of June.
This corresponds to a doubling compared to the earlier production
peak of 2,904 barrels per day.
Production in the Jura 10-layer
In the hydrocarbon bearing layer in the lower Jurassic-intervals,
Jura 10, which were identified at the end of 2007, production tests
have been carried out in three wells with positive results. These
results will have a positive effect on the company's official
reserves since the Jura 10 layer has not yet been included in the
figures from the Russian State Committee of Reserves (GKZ)."The hydro fracturing programme and the expected production from
the Yu 10 layer together with the overall quite comprehensive
operational programme in 2008 makes me feel confident with our
production target of 8,000 barrels per day by the end of the year"
says Fredrik Svinhufvud.
Operational programme 2008
The 2008 operational programme for Malka Oil comprise, in addition
to hydro fracturing, a drilling programme of up to 16 new
production wells and one to two new exploration wells. A western
study of the reserves according to SPE norms will be published
during the second quarter in the form of a Competent Person's
Report (CPR). The collection of 720 km of seismic data from the so
far virgin northern part of the block is completed. The
interpretation of this data has started and is expected to be
completed during the third quarter. Finally the own direct
connection to Transneft for oil and condensate deliveries is
expected to be ready during the fourth quarter.
Malka Oil repeats its existing estimate that the extractable oil
and condensate reserves in the three existing oil fields amounts to
140-190 million barrels.
For further information, please contact:
Fredrik Svinhufvud, Managing Director Malka Oil, tel +46 8 5000
7811, mobile +46 708 708 708
Richard Tejme, CFO, tel +46 8 5000 7812 mobile +46 707 31 52 17
For further information on Malka Oil AB, see the website
www.malkaoil.se
Malka Oil AB (publ) is an independent oil and gas production
company operating in the Tomsk region in western Siberia. Their
current position consists of oil and gas assets for license block
number 87 in the said region. The block has a surface of 1,800
square kilometres. There are currently three oil fields at the
license block, namely Zapadno-Luginetskoye ("ZL"), Lower
Luginetskoye ("LL") and the Schinginskoye oil field, and a large
quantity of other not yet drilled oil structures. The ZL and LL oil
fields are in production and these two oil fields field have also
went through reserve classification by the Russian State Committee
of Reserves (GKZ). A considerable drilling programme was carried
out in 2007. The GKZ registered extractable oil and condensate
reserves in the categories C1 and C2 amounted to 97 million barrels
at the end of 2007. The company's own estimate of its extractable
oil and condensate reserves in the three existing oil fields on
license block number 87 is currently 140-190 million barrels.
Malka Oil's license block is surrounded by a large number of
producing oil and gas fields.
Reasonable caution notice: The statement and assumptions made in
the company's information regarding Malka Oil AB's ("Malka")
current plans, prognoses, strategies, concepts and other statements
that are not historical facts are estimations or "forward looking
statements" concerning Malka's future activities. Such future
estimations comprise but are not limited to statements that include
words such as "may occur", "concerning", "plans", "expects","estimates", "believes", "evaluates", "prognosticates" or similar
expressions. Such expressions reflect the management of Malka's
expectations and assumptions made on the basis of information
available at that time. These statements and assumptions are
subject to a large number of risks and uncertainties. These, in
their turn, comprise but are not limited to i) changes in the
financial, legal and political environment of the countries in
which Malka conducts business, ii) changes in the available
geological information concerning the company's projects in
operation, iii) Malka's capacity to continuously guarantee
sufficient financing to perform their activities as a "going
concern", iv) the success of all participants in the group, or of
the various interested companies, joint ventures or secondary
alliances, v) changes in currency exchange rates, in particular
those relating to the RUR/USD rate. Due to the background of the
many risks and uncertainties that exist for any oil-prospecting
venture and oil production company in its initial stage, Malka's
actual future development may significantly deviate from that
indicated in the company's informative statements. Malka assumes no
implicit liability to immediately update any such future
evaluations.
