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Results for 2005
In 2005 the company drilled 4 production wells on Untygei oil field. They added to production about 3,000 tones per month (870 bopd). That helped for the first time in the company's history to exceed 100, 000 tones of the annual production (114,900 tones).
The revenue in 2005 was US$ 28,6 mln; EBITDA US$ 8,8 mln.
Hydro fracturing in well #105 was done resulting in a two-fold increase of production from the well from 150 to 300 bopd.
Four progressive cavity pumps manufactured by Kudu Industries (Canada) were installed to ESP. Export Development Corporation of Canada (a Canadian Government body) facilitated the delivery of credit to purchase these pumps.
Capital development. In addition to construction of four production wells the following projects were realized:
- Construction of Commercial Custody Transferring Station
- Construction of new storage reservoirs at the Transferring Station
- Construction of total 23,8 km of roads and a 1,1 km power line
- Expansion of well platform on pad #2 and construction of a new well platform on new pad #4 in consideration of further drilling works planned for 2006.
Total capital expenditures in 2005 made up US$ 9,7 mln.
Geological Studies. The field stage of seismic research was completed in summer 2005 and the seismic data was passed over to geological company "Pangea" for data processing and primary interpretation. Further these data will be delivered to GLJ Petro0leum Consultants Ltd. to complete the reserves estimation.
January 15, 2005 CanBaikal Reports Doubled Oil Production Compared to the Year 2003
Results for 2004
During 2004, CanBaikal Resources Inc. (hereto as "the Company") continued the development of the Untygei licensed block. Since the start of the year, seven oil wells were put into production: one exploratory well and six production wells. In 2004, the Company activated the Untygei oil field on the licensed block by drilling two production wells and one exploratory well #105. All three wells proved to have oil in the Jurassic section.
As a result of exploration and drilling activities completed in 2003 and 2004, the company reported an increase, preliminary evaluated at 1,872 mln. tonnes of proved reserves. However, due to the absence of the results of the well tests on the Untygei oil field, the Territorial Commission of Reserves only accepted the reserves, which were discovered on the Kulun oil field to be 172 thousand tonnes of Proved oil. Final decision on newly found oil reserves is planned for the first half of 2005.
As part of the Geological study, besides the drilling of the exploratory well, JSC "Khantimansijskgeofizika" completed a 2D seismic data acquisition of approximately 458 linear km. 251 linear km. of which were completed in the Southern part of the Untygei licensed block and 207 linear km. were completed on the newly acquired "42nd Ugansk" licensed block which has exploratory status.
The Scientific and Technical Board of the Company reviewed and accepted an intermediate report outlining the results of the seismic crew work on December 24, 2004. Some of the results included: determination of the contour of the South periclinal of Untygei oil field, discovery of a new highly-prospective structure "Koimsapskaya", and recommendation of necessary volume of detailed 2D seismic survey.
Regarding production facilities, the construction of an electric power line to well #10, the core of the Kulun oil field, and to well #2, the core of Untygei oil field, was completed. This secured continuous supply of electricity to the licensed block.
The total oil production for 2004 is 82,4 thousand tonnes. This is almost two times greater than the production volume of 2003. The profit in 2004 is estimated to equal US,4 mln. The total capital investment in 2004 is US.5 mln.
Plans for 2005
In 2005 the Company is going to continue with a Pilot Production Project on both Kulun and the Untygei oil fields, which were covered by previously drilled exploratory and production wells. According to the approved base-case scenario, three production wells will be drilled. When the full volume of necessary field geophysical surveys is performed, it will prove the increase of proved oil reserves by 1,5 mln tonnes.
In 2005 the Company projects to produce 110 thousand tonnes of oil. Total capital investments are projected at US,2 mln. Besides the drilling projects, construction of roads, inner-field oil pipelines, and front-end preparation is planned for a mini-booster pumping station to be introduced into service in 2005 in the area of the well-pad #2.
In addition, construction of a basic block of the inner field pipeline with diameter of 159mm from well-pad #2 - Untygei to the main valve station is planned. This will improve the existing system of oil gathering and transportation. It will also satisfy the increasing volume of oil production.
The existing Custody Transferring Point of the Company will be rebuilt into a Commercial Custody Transferring Station on the booster pipeline pumping station "Western Ugut." This will allow the Company to avoid possible problems such as groundless rejection for the oil processing and preparation by the JSC "Uganskneftegas". Based on the results of study and analysis of earlier completed seismic work, it is planned to finish seismic study of the majority of the Untygei licensed block. The only exception is the bounded reservoir to the West of the Kulun oil field, where it is possible to discover a continuation of the Kulun structural composition.
Primary Goals for 2005
- Drill and to put into production three production wells on the Untygei oil field (February - March).
- Assemble and a start-up the Commercial Custody Transferring Station (March - June).
- Complete construction of a section of a year-round road (January - December).
- Complete seismic 2D survey of Untygei and adjacent "42nd Ugansk" exploratory licensed block totalling 350 linear km (field work: January - April, processing, interpretation and delivery of results: April - December).
- Carrying out of activities directed at increasing well production (Hydrofrac, well-bore acid treatment, etc) (February - March).
- Construction of the surface production facilities (assembling of the oil-treatment unit, etc.) (April - October)
- Monitoring of the geological studies and the process of oil field development (during all 2005)
- Front-end engineering for a mini-booster pipe line pumping station, construction of inner field pipelines, and construction of a pipeline connecting with existing pipeline system of JSC "Transneft" (all 2005)
- Planned volume of oil production is 110 thousand tonnes.
| Revenue |
- |
US |
,9mln. |
| Profit |
- |
US |
,8mln. |
| Capital Investments |
- |
US |
,2mln. |
July 8, 2004 CanBaikal Reports further drilling results on its licensed block
The Untygei oil field on the licensed block owned by CanBaikal Resources Inc. was activated by drilling an exploratory well #105 in April 2004. Well #105 was completed at the projected depth of 3,050 meters on May 13th, 2004. It is currently expected to be tested and put into production.
Based on the results of logging, thickness of the main productive sandstone U12 is 8.4 meters compared to 4.8 meters in well #2. The depth of these sandstones for well #105 is 10-13 meters less than for well #2. The received results confirm optimistic scenario of geological model for Untygei pool, which means increasing the volume of oil bearing sandstones and changing of the area of hydrodynamic lock.
As of June 6th, 2004, the first new production well #225 on Untygei pool was completed.
Logging has been done and casing was lowered. The projected depth is 3,434 meters. The distance from the original vertical base point to the final point was 1,450 meters (directional well).
Based on preliminary findings from well #105 and well #225, there is a possible increase of up to 7.5 to 7.8 km2 of proved oil bearing sandstone (C1 based on Russian classification of reserves) compared with 2.7 km2 approved earlier by the State Committee of Reserves of the Russian Federation.
April 20, 2004 CanBaikal updates Untygei License Area Drilling Program
CanBaikal Resources Inc. is pleased to announce commencing of the drilling of a new exploratory well #105R on Untygei pool of Untygei license area. The projected depth is 3055 meters and will allow opening as well as exploring multiple oil shows in productive Lower Jurassic layers.
Permanent monitoring of the geological information received while drilling of the well #105R will lead to full-scale development of the Company's second oil pool. CanBaikal Resources Inc. has 100% interest in the Untygei license area consisting of two pools - Kulun and Untygei.
March 18, 2004 CanBaikal Board of Directors Approved Report of Financial and Production Results for 2003 and Business Plan 2004
Board of Directors of CanBaikal Resources Inc. approved of the Company's Management report and results for 2003 and business plans for 2004.
Oil production for the year 2003 totaled 340,860 bbls, (100% net to CanBaikal). Revenue for 2003 totaled US,021,000. Capital investment totaled US,611.000.
The Business Plan approved by the Board of Directors for 2004 is considering the following activities:
- to drill two development wells into the Kulun reservoir;
- to drill three new wells, including an exploratory one on the newly built second drilling pad for the Kulun reservoir;
- to drill three new wells, including an exploratory one into the Untygei pool;
- to complete a seismic survey of the entire Untygei license area;
- to complete the necessary research and development studies including well logs, analytical and other studies to improve the development plan and development drilling;
In 2004 eight new wells will be drilled and completed, including two exploratory wells. Capital investment in the development of the Untygei license area in 2004 will total US,134,000. Planned production is expected to total 1,193,920 bbls.
CanBaikal Board of Directors approved new Management appointments.
Mr. Sergey N. Ermolaev was appointed as Acting President of CanBaikal Resources Inc. Mr. Viktor R. Islamov left this position due to a transfer to another job.
Mr. Yuri V. Ovcharov was appointed as Acting Head of the Russian, city of Nefteyugansk, Branch of the Corporation. Mr. Sergey N. Ermolaev, left this position to assume responsibilities of Acting President of CanBaikal Resources Inc.
February 12, 2004 CanBaikal Reports Significant Improvement in Production and Financial Results and Approved Plans for 2004
CanBaikal Resources Inc. reports that in the year of 2003 the Company continued to implement the program contemplated in the "2002-2004 Program of Urgent Measures for Implementing the Untygei License Agreements" approved by The Interdepartmental Subsoil Licensing Commission on May 23, 2002.
In 2003 four wells including three development wells and one exploratory well were drilled with the total depth of 17,193 meters. Completed wells have the total depth of 12,836 meters. An average depth for drilled wells is 3,209 meters. Four wells were put into production and this significantly increased the total oil output from the field.
Drilling of an exploratory well allowed to improve the geological understanding of the reservoir as a whole and to define more precisely oil reserves.
The first horizontal well, 1G, has been drilled with use of polymer additives in drilling mud to preserve the good filtration characteristics of opened productive horizons. The horizontal offset of the well is 150 meters. Initial production tests showed production at a rate of 886.7 bpd with a fluid dynamic level in the well of 340 meters. That high dynamic level promises an even bigger potential production rate from this well, which is 2.5 to 3 times higher than production rate from directional wells. Results from drilling of the horizontal well proved the economic efficiency of developing the oil field by drilling of horizontal wells and this approach will be applied in developing of both the Untygei and Kulun reservoirs in Untygei license area.
A year-round road has been completed connecting the Federal road with well pad #2 of the Untygei reservoir in the license area.
A new 2D seismic survey for 270 km2 was commenced in the southern part of the license area.
Project documentation was completed for the development and monitoring of the Untygei license area based on the results of exploratory, development, and horizontal drilling along with 2D and 3D seismic data and its interpretation. Reserve evaluation by the Gilbert Laustsen Jung Associates Ltd., Petroleum Consultants is in its final stage. Due to the length of the procedure to receive permission for the surface rights to drill a well into the Untygei reservoir, drilling has not commenced yet, but construction of foundation of drilling pad #2 had been completed. In total, applications for five new drilling pads were submitted.
Oil production for the year 2003 totaled 340,860 bbls, (100% net to CanBaikal) which is 204.5% higher than in 2002. Revenue for 2003 totaled US,021,000 which is 245.6% higher than in 2002. Capital investment totaled US,611.000, which is 267.5% higher than in 2002.
Taking into consideration the level of development achieved in the Untygei license area, the following priorities for 2004 were established:
- to drill two exploratory wells into the Untygei reservoir within one year to be in compliance with the license commitments,
- to complete the seismic survey of Untygei license area commenced in 2003,
- to complete construction of new drilling pad for the Kulun reservoir, and
- by the end of 2004 to complete a reserve evaluation of the Kulun pool and to prepare the full development and site construction plan which will include oil production from the U2 horizon
The Business Plan approved for 2004 was prepared to achieve the following goals:
- to drill two development wells into the Kulun reservoir, which were planed to be drilled from the first pad in 2003,
- to drill three new wells, including an exploratory one on the newly built second drilling pad for the Kulun reservoir to the North-East from the first drilling pad,
- to drill three new wells, including an exploratory one into the Untygei reservoir,
- to prepare a study for the optimal location to drill the second exploratory well into the Untygei reservoir and to complete all necessary preparation work for drilling in the winter season of 2004-2005,
- to complete a seismic survey of entire Untygei license area, and
- to complete the necessary research and development studies including well logs, analytical and other studies to improve the development plan and development drilling.
As a result of the execution of the business plan, eight new wells will be drilled and completed, including two exploratory ones.
Capital investment in the development of Untygei license area in 2004 will total US,134,000. Planned production is a total of 1,193,920 bbls.
July 23, 2003 CanBaikal Encounters 27 Meters of Oil Pay in New Exploratory Well
CanBaikal Resources Inc. reports that exploratory well #101 on Kulun field of Untygei license area was successfully drilled and logged to a depth of 3218 meters. Location of well #101 was chosen based on the results of 3-D seismic surveying predicting 9 meters of oil pay for U12 sandstone. Analysis of the logs shows 18.2 meters of prospective oil pay for the layer U12 in the interval between 2916 meters and 2938 meters.
Prospective oil pay zone U2 in well #101 is much thicker than in producing well #10. In well #101 U2 has a thickness of 9 meters in the interval between 2976 meters and 2993 meters. CanBaikal has completed and perforated this well and is producing oil grade API 34 from both layers for a total volume of 100 m3/day (630 bbls/day) with no fracture work.
Second well #111 commenced drilling from the same pad. Eight wells are supposed to be drilled in total on Kulun field of Untygei license area. CanBaikal Resources Inc. has 100% interest in the Untygei license area. Today's daily production is totaling of 1300 bbls/day.
March 10, 2003 CanBaikal Resources Inc. In the Eyes of the Russian Press.
Business News Agency (ABN) 07.02.2003 Saint-Petersburg, Russia 15:16.
In February, "City Expertise Center" based on the contract with JSC Oil Company CanBaikal Resources Inc. producing oil and gas in Khanty-Mansiysk Autonomous Okrug of Russia, will develop a Plan to Warn About and Eliminate Oil Spills.
This was made public by ABN (http://www.abnews.ru/) at the City Expertise Center. CanBaikal Resources Inc. is well in advance taking measures to provide its oil production with environmental safety becoming one of the few Oil Companies operating in Russia to do so to date as mentioned in City Expertise Center. The company financial well being as well as the scale of ecological damage, which cannot be measured in dollars, depends on prompt enterprise employee reaction to localize the oil spill. The company personnel should be well organized in this situation and this is why GOSGORTEKHNADZOR and the Ministry of Emergency Situations of Russia require that every Oil Enterprise must have a plan to warn about and eliminate oil spills and the personnel must be familiar with this plan. The development of this plan is mandatory for all companies in the oil industry. Possible accident situation and the probability of their occurrence and the scale of environmental damage will be simulated and calculated. Also a list of measures will be created to eliminate emergency consequences within the plan.
March 5, 2003
The Management of CanBaikal Resources Inc. discussed and approved the company business plan for the year of 2003. In accordance with the business plan, oil production will total 750,000 bbls in 2003, revenue in 2003 will total US.5 million, and cash flow from operation activities in 2003 will total US.65 million. Capital investment will total US.8 million.
March 3, 2003.
CanBaikal Resources Inc. commenced drilling of exploratory well on Kulun pool of Untygei license area on 03.03.2003. Five wells will be drilled from the same pad before September 2003.
A new year round service road of 13.2 km. and drilling pad to drill another four wells on Untygei pool are under construction on a license area at the same time. This road will allow a year round access to the main pool of the license area. Ten kilometers of this road has been completed.
Scheduled completion of this construction is end of March 2003.
October 22, 2002. Meeting of CanBaikal Resources Inc. Board of Directors
The meeting approved financial reports and an activity report presented to the Board of Directors by the management of the company. The company carried out the following work:
Field Rehabilitation
Workover of Well #2 and Well #10 was completed and their operation was optimized. Preventive measures were taken to protect the existing pipeline from freezing in wintertime. Equipment required for complex operations was purchased and installed on both wells to secure production when road conditions seasonally worsen. Daily oil production grew 40% year-to-year and reached 720 bpd.
Establishing an efficient sales system
Direct oil sale contracts were executed with reliable oil trading companies including Glencore International AG. Exports for the first six months of 2002 were 35.2% of the total sales.
Geological Exploration
A 3D seismic survey was completed (120 sq km). Existing 2D seismic data was re-interpreted (100 linear km). Shlumberger submitted a report on the results of re-interpretation of 2D seismic data. Re-interpretation of previously acquired seismic data and interpretation of 3D seismic data will enable the company to submit a scientifically substantiated report on the estimation of reserves within the Untygei license area to the Territorial Commission and then to the State Commission of Experts by the end of 2002.
Development of Medium-Term Strategy
The new management of the company developed a 2002-2004 Program of Urgent Measures for Implementing the Untygei License Agreements. The Program approved by the Interdepartmental Subsoil Licensing Commission on May 23, 2002 in Khanty-Mansiysk provides for seismic surveys, updating the estimation of oil reserves, drilling six new wells within the area of proved reserves, developing and bringing the wells on stream and the construction of a road connecting them.
Dealing with Tax Arrears and Accounts Payable
All accounts payable to the main contractors have been paid as well as tax arrears for 2000 and 2001 in the amount of CDN5,400 (10.8 million Russian rubles). Starting from the 1st quarter of 2002, payments to the budgets of different government levels are being made in full.
The meeting approved the company's business plan for the second half of 2002 that envisages the achievement of the following principal objectives:
- Stabilize daily oil production rate at no less than 700 bpd.
- Obtain the results of the 3D seismic survey and the re-interpreted 2D seismic data and submit a report on geological surveys to different funds of the Committee for Natural Resources of the Khanty-Mansi Autonomous Okrug.
- Prepare documentation for an audit of oil reserves in accordance with international standards.
- Finalize the tender for awarding a drilling contract.
- Complete preparation for drilling new wells, which is planned to commence in January 2003.
- Carry out survey and engineering work for the construction of an 11 km road between the wells.
February 1, 2002. First Meeting of the CanBaikal Resources Inc. Board of Directors After Change of Control
The Board of Directors of CanBaikal Resources Inc. met for the first time after the change of control over the company. Mr. Sergei Chernikov, Chairman of the Board of Directors, in his address to the meeting said that the company shareholders provided funds to fulfill the top-priority tasks of the company, such as:
- Work over and putting into operation Well #2 and Well #10, increasing oil production.
- Developing an efficient sales system.
- Carrying out a 3D seismic survey.
- Developing the 2002-2004 Program of Urgent Measures for Implementing the Untygei License Agreements.
Sergei Chernikov expressed his confidence in the ability of the new management as a team of professionals with extensive experience in the Russian oil and gas industry to fulfill the assigned tasks. The meeting approved the business plan of the company for the first half of 2002.
| 2006 |
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July
Drilling company Argillit commenced drilling works commenced on pad #4. At the same time CanBaikal started construction of site for buster pumping station and power station. The power station will utilize the well head gas. Putting the power station into operation will help to supply the oil field with the own electricity and to carry out the direction of the Government of Khanty-Mansiysk region to stop gas flaring till 2010.
July
Deloitte Touche completed financial audit for the year of 2005. EBITDA last year made up CAD 9.974 million.
May
Drilling works commenced on pad #2. The contractor is drilling company Argillit. It is planned to complete the pad till the end of the year
April
A 25-mln dollar facility agreement with Moscow Narodny Bank (London) was signed to finance drilling and oil-field construction works. The loan maturity is 3 years
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