CSH Civitas Social Housing Plc

RNS Number:6451T
Caspian Holdings plc
04 November 2005


4 November 2005

                              Caspian Holdings Plc
                          ("Caspian" or "the Company")

                    Zhengeldy Oil Field Production Capacity

Caspian announces the preliminary results of the Schlumberger Central Asia
("SCA") comprehensive field evaluation and logging programme. The Company has
commenced a detailed production improvement programme, based on the results,
involving workover of existing wells, drilling of five new wells and upgrades in
field infrastructure.

The first stage of the programme is estimated by SCA to result in oil production
from at least six and potentially all nine new wells drilled this year at a rate
of 150-210 barrels per day based on the six wells being in production. Following
evaluation of the workover programme, Caspian plans to implement a second stage
five well drilling programme targeting an estimated additional 300 barrels a day
targeting a total estimated field production of 450-510 barrels a day from 11
wells.

Background

During the September Quarter Caspian, with the assistance of SCA, completed an
extensive field evaluation and logging programme to identify options
significantly to increase production from the nine oil wells drilled in the last
12 months and to assess the production capacity of the Zhengeldy licence area.

To complete this programme a number of producing wells were temporarily shut in,
resulting in production for the September quarter 2005 reducing to 8,900 barrels
compared with 9,400 barrels in the June Quarter.

The programme had two components - extensive evaluation and re-logging of the
existing wells and the construction of a new geological and reservoir model
built from the core data collected from the nine new wells and three reactivated
wells drilled and logged since commencement of operations. From this base,
recommendations have been made to significantly increase the production from
existing wells and to drill five identified high potential wells.

Production Improvement Programme

The production improvement programme has four components:

1. Workover programme to deliver production from six and possibly all nine new
wells. Three currently shut in wells (107, 106, 114) will be brought back into
production following completion of remedial cement work and new perforations.
Additional perforations will be added to two existing production wells (111,
112) following the identification of significantly larger oil pay zones and
pumping rates will be increased at well 113. Testing will also commence on three
wells (115, 116, 123) previously considered "dry" following identification of
prospective oil bearing zones.

2. Drilling of up to 5 new high potential wells on the lake and northern licence
area. The SCA review has recommended the drilling of five new wells - three on
the dry salt lake and two to the north of the licence area. The new geological
model and reservoir review provides for improved targeting of well locations. A
414m road has been constructed across the dry salt lake area at a cost of
US$250,000 to allow drilling of the three target wells on the dry salt lake.

3. Improved field operations infrastructure
Pumping rates at the wells are set to increase following the installation of
environmentally approved water disposal facilities. Prior to the winter freeze
all wells have been connected by covered flow lines to the central gathering
station to remove winter production constraints and a new sweet water well has
been brought on line. Water disposal, absence of light water, and flow lines
have previously been a significant limitation on production.

4. Export facilities and logistics.
Export facilities are near completion with the installation of a heater and
additional storage tanks. Ministerial approval has been received to allow
exports.

Caspian will take a cautious and staged approach to implementation of this
programme. Field infrastructure is complete. The workover programme will be
carefully implemented during November, for shut in wells, and December for the
producing wells (111,112, 113). Once the results of the workover programme are
confirmed, Caspian will commence the new drilling campaign

Production Capacity

Based on the reservoir model, the history of oil production from the field and
implementation of the proposed production improvement programme, SCA has made an
assessment of the production rate that could be achieved from the six existing
production wells once the previously shut in wells are brought back into
production (106, 107, 111, 112, 113, and 114) and the proposed five new wells.
No production estimate has been made for wells 116, 115 and 123 which have the
potential to yield results.

It is estimated that following the proposed workover programme, the six existing
production wells, could produce on average 25-35 barrels a day for a total
estimated rate of 150-210 barrels a day by the end of December 2005. Subject to
the normal risks associated with oil and gas exploration, it is estimated that
the five new wells, properly cemented and completed, could produce on a most
probable estimate basis 60 barrels a day for a total estimated rate of 300
barrels a day for five wells. In total this programme brings the improvement in
production to 450-510 barrels a day.

This rate of production is significantly lower than the rate of production
estimated by the Competent Person Report ("CPR") in the Company's AIM admission
document of 4 November 2005. On the basis of the original Soviet geological
model and the log results from the old production wells drilled between 1934 and
1945, the competent person estimated that the first stage of development of
Zhengeldy could produce at a rate of 1,400 to 2,100 barrels a day from five
successful wells. The competent person further estimated that if the first stage
were successful, production could be increased further to around 4,300 barrels a
day from investment in a further 10 wells.

With the benefit of 12 months operating history and the modern log results of
nine new wells it is now clear that the daily production rates per well
indicated in the CPR were too high and cannot be realised. There are a number of
reasons for this variance:

   * Production management.
    The SCA review has identified up to eight oil bearing levels in the
    Zhengeldy oil field. The levels are thinner than the 4 levels analysed in
    the CPR. Current production techniques allow for production from one level
    at a time. We are exploring how production from multiple levels can be
    achieved cost effectively.


   * Sand/Shale changes within levels.
    The CPR was based on the assumption of homogeneous sand levels - the
    operating experience has been that there are material changes in the shale
    sand mix within productive levels limiting rates;


   * Limited drilling success in the deeper "Triassic" levels.
    The deeper higher pressure levels (400-800m) were expected to produce higher
    daily rates than the shallower levels. Caspian has had limited success in
    the Triassic level and the carboniferous nature of the deeper levels has to
    date not produced good flow rates. A reserve update will be provided at the
    conclusion of the SCA review following assessment of the workover programme
    results. The company, based on this advice, will continue to investigate the
    Triassic level but in the interim it is prudent to downgrade the Triassic
    reserves to probable

Michael Masterman, Executive Chairman of Caspian, commented: "In the current 1.5
sq km licence area, we have a solid operating oil field which, subject to the
successful workovers, should provide steady cash flows to allow the Company to
further develop the field whilst pursuing other opportunities in the region. The
field is not the low capital-high production rate that was indicated in the
competent persons report. Instead we have a field similar to the shallow Western
Siberian oil fields, which can generate healthy overall production rates from a
large number of low capital cost shallow wells. Our immediate priority is to
increase production from the existing wells and then move to the new well
locations selected by SCA and the management team. In parallel we are awaiting
the Kazak Government regulatory approval of the companies licence extension
application which if approved will open up new expansion opportunities for
Caspian.

The Company is also looking to further strengthen the board with the appointment
of a Technical Director, and an announcement will be made on this in due course
when the appointment is confirmed."

Ends

Enquiries:

Caspian Holdings Plc    Hoodless Brennan          Parkgreen Communications
Michael Masterman       Luke Cairns               Justine Howarth / Ana
                                                  Ribeiro
T: +44 (0) 7791288381   T: +44 (0) 20 7538 1166   T: +44 (0) 20 7493 3713


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