2.0        AMGURI – Developed Block Amguri Block is located in Assam and covers 52.75 Sq.Km.  This block is a Developed Block and has potential of 2P recoverable resources as per report of Sproule dated October 28, 2007 and as mentioned in this report. 2.1        Resource Assessment Sproule is an internationally recognized and specialized body engaged in making resource/reserve assessment in Exploratory and Developed fields.  Its certification on resource / reserve in Exploratory and Developed fields is internationally accepted.
BEST ESTIMATE  (2P)   OIL GAS   OOIP MMbbls Recoverable Oil MMbls OGIP Bcf Recoverable Gas Bcf Amguri 177 60 403 229
2.2        Reserve Assessment Sproule has submitted its Reserve Assessment Report as of March, 2008 pertaining to the wells already drilled and assigning few more new wells in the same zone.  The report has indicated 2P reserve of oil condensate and gas at 10.547 million Boe which indicates significant upside in reserve potential.  However, this reserve figure does not cover the entire field of Amguri. 2.3        Drilling This field, which is a developed block, has been producing oil & gas since April 2006 from two wells, i.e. well No.5 and No.6.  Besides well No.8A also produced gas but the same has been put on suspension temporarily due to facilities constraint and other technical issues.  Subsequently, the consortium of CRL and ACL has drilled two more wells - 10B & 11. The result from drilling of these two wells has shown great success with a potential of combined production of 4000 Boe per day.  Amguri well No.11 has discovered three zones, which has shown significant deposit of oil and gas. This success has projected an upswing of earlier estimate by Sproule.

2.4        Production

Well 5 has been temporarily put on hold to carry out further work over operation to take care of some technical issues for maintaining the health of well and to enhance the production.  It is expected that well 5, which was earlier producing about 100 bbls per day, will be back in production stream in 2008.

Well 6, 10B and 11 are producing about 550 bbls of oil and 1,90,000m3 of gas per day, which is about 1700 boe per day.  The production will further enhance once adequate facilities are created and further wells are drilled.

In this connection, it will not be out of place to mention that at Amguri 11 only the top most zone is being produced though oil and gas has been discovered in three zones.  The timing for placing the additional two zones on production will be decided after finalisation of depletion plan and installation of appropriate facilities. With this the production will further increase matching with the total potential.  The gas reservoir has been found to be of retrograde gas condensate reservoir. The consortium has planned for a cryogenic plant for stripping the gas and produce condensate and LPG (Propane and Butane) and then sell lean gas.  This process will increase the revenue substantially.

2.5        Future Drilling Plan

CRL and ACL consortium after completion of current Appraisal Wells drilling programme will submit a Comprehensive Development Plan for the Amguri Block as a whole to DGH.  About 12 wells including 2 Tipam Wells and 2 Work Over Wells have been planned during 2008-09.  In order to achieve this ambitious target, the consortium is deploying two Rigs.

2.6      Quality of Oil

The quality of the crude oil being produced from this Block is superior to “Bonny Light” crude which is the identified benchmark evaluation for Indian crude oil for international price and has been certified by Indian Oil Corporation.  The consortium gets premium US$ 4-5 per bbl over Bonny Light Crude due to its superior quality.
 
2.7      Development Plan 

The consortium of CRL and ACL is in the process of drawing up a full scale Development Plan for submission to DGH seeking its approval so that the consortium can enhance the production level from 2008-09 at a significant level.  With this intention in view, CRL and ACL have approved drilling of twelve wells in the budget of 2008-09 with an investment of over US$ 64 million.  While presenting the budget of 2008-09, CRL, the Operator, had also projected net revenue projection of over US$ 60 million (after direct operating expenses).  However, all the new twelve wells will not be in production stream from 2008-09.  With full production from all the twelve wells, the revenue generation will see a significant quantum jump.

In this Block, ACL has a participation interest of 40% whereas CRL has 60%.

3.0      AA-ON/7 – Exploratory Block

3.1      This block covers 468 Sq.Km. and 319 Sq.Km. covering the States of Assam and Nagaland respectively.  The consortium of CRl and ACL has conducted 145 LKM seismic data with an investment of over USD 4.00 million covering areas within  Assam and Nagaland. These areas have been identified as the most resourceful / prospective zone for further exploratory activities.  The consortium plans to undertake exploratory drilling in this zone in 2008-09 after the processing and interpretation of seismic data is completed.  The consortium has also approved acquisition of additional 50 LKM seismic study during 2007-08.

3.2     The consortium has already drilled three exploratory wells. Workover operations have also been conducted in one well.Though, there has been Oil & Gas show during the drilling operation, the commercial viability is yet to be established.

3.3     The Government of Nagaland had issued PEL in 2006 for E&P activities in the State of Nagaland.  This will allow the consortium of CRL and ACL to pursue E&P Exploratory activities in the State of Nagaland during the period of next seven years.  Both CRL & ACL are quite upbeat in E&P activities in Nagaland considering highly prospective zone.

Sproule as per their report dated 24th May,2006 has indicated 2P resource assessment as per table given below:

BEST ESTIMATE (2P)

3.4     The consortium has submitted the proposal of extension of Exploratory phase to DGH and obtained in principle approval.  During 2008-09, the consortium has committed minimum work program with an investment of US$ 17.30 million approximately, out of which, the Company’s share will be about US$ 6.05 million.  Three Exploratory wells have been planned during 2008-09.Considering drilling work programme, a separate Rig has been deployed by the Consortium.

4.0     MARGINAL FIELDS – Discovered Blocks

4.1    The Company obtained operating license under lease from ONGC for Discovered Blocks - Laxmijan, Barsilla and Bihubar.  The Company had already carried workover operations in one well each in Laxmijan and Barsilla. Both the the wells  have established good hydrocarbon presence while Barsilla has been producing oil, further efforts are on to put the wells on sustained production.

Further work plan in Laxmijan, Barsila and Bihubar is under finalization, which may evolve more seismic study and enhanced production. The Company is quite upbeat in discovering significant presence of hydrocarbon in these discovered fields as they are located in a well recognized area.

4.2    Strategy

The Company has already planned to expand its oil assets portfolio by acquiring more assets either through acquisition or through bidding process optimizing proper mix of producing and Exploratory Blocks.  With this strategic approach, the Company will be able to maximize the revenue in a short period of time.  The Company’s E & P activities in Oil & Gas Sector has taken a quantum jump and looks forward to significant cash flow generation and enhancement of shareholders’ value in coming years. 

 16th June,2008