January '08 Issue

Drilling operations begin the Amguri 13 appraisal location on the Amguri development block in northeast India. Amguri 13 is located in the northeast portion of the field, near Amguri 1, the original discovery well. Amguri 13 will be directionally drilled with the shallow capacity drilling rig to an approximate depth of 3,150 meters into the Barail formation. This structurally up-dip location will evaluate the main Barail sand and the previously announced new Barail gas zone when Amguri 1 was reentered in 2005.

Assam Company Updates Future Production Plans

Assamco is pleased to confirm that the current production results reported are consistent with the test results earlier reported during the completion of the Amguri 10B and 11 wells. As reported, Amguri 10B tested 558 boe/d, while Amguri 11 tested 3,190 boe/d from three zones in the Barail. Both of these tests were conducted at wellhead pressures of 2,200 psi or higher.

In Amguri 11, only the top most zone is being produced, with its production rate being constrained by facilities related issues. The two lower zones, which previously tested at combined rates of approximately 740 bbl/d of condensate and 6.7 mmcf/d of natural gas (or 1,850 boe/d) at high pressures in excess of 2,000 psi, have not yet been completed for production. These lower two intervals are isolated from the producing sand with bridge plugs. In light of the test results, Assamco expects that production capacity and rates will increase substantially over the current capacity of 2,040 boe/d once Amguri 11 is completed in all three zones, and surface facilities are upgraded to permit production from Amguri 10B and 11 at lower wellhead pressures.

The timing for placing the additional two zones on production is dependent on several factors: further drilling to delineate the field (results from the current 10 well program), a finalized depletion plan, and installation of appropriate facilities. Recently acquired data from the pressure transient/build-up and reservoir fluid sampling program is being analyzed, with the results known later this month. This test analysis, coupled with production and drilling results will be integrated into an extensive reservoir modeling process. The reservoir modeling should form the basis for the long term management and optimization of the reservoir.

Consortium of Assamco & Canoro is in the process of determining a way to monetize the LPG stream. With existing facilities, a significant amount of liquids still remain in the gas stream. Recovery of those additional liquids should increase overall revenue from the production stream. A joint technical and economic study has been initiated with a potential local off taker to address this issue. Also, Consortium has initiated discussions with the current gas off taker that may lead to higher natural gas prices in the future.

Amguri 10B and Amguri 11 wells are on production. Combined gross production from the Amguri field is now able to average approximately 870 bbl/d of condensate and 7.0 mmcf/d of natural gas or 2,040 boe/d. This increases ACL’s Canoro’s net production capability to approximately 1,225 boe/d from 295 boe/d previously . Water production from Amguri 10B and 11 is less than 1%. These wells were placed on production on January 29, 2008.

The production rates are above current facility limits and gross production is being restricted to 585 bbl/d of condensate and  4.7 mmcf/d of natural gas or 1,370 boe/d until the constraints are  removed. To alleviate these constraints, a new 10” gas pipeline is being constructed with completion expected later this quarter,and increasing capacity at the Moran oil transfer station. With the elimination of these bottlenecks, further production increases are anticipated.

At the present time, Amgiri 11 is only producing from one of the three previously tested intervals.

2 (two) No. conversion notice with conversion date 7th January 2008 have been received by the company  for conversion of Foreign Currency Convertible Bonds aggregating to USD 3.3 million. In terms of the FCCB offer circular and method of conversion the Company has allotted 51,45,703 equivalent Equity shares of Re. 1/- each vide Board resolution dated 18th January 2008 to the following allottees :-
1) Goldman Sachs Investment (Mauritius) I Ltd FCCB; No. of Equity Shares - 20,27,095.

2) Grants Investment Ltd - FCCB, Mauritius; No. of Equity Shares - 31,18,608.