Operational Update
June 02 2005 - 3:01AM
UK Regulatory
2 June 2005
NELSON RESOURCES LIMITED OPERATIONAL UPDATE -
INCREASING PRODUCTION LEVELS DURING SECOND QUARTER
Nelson Resources Limited (TSX / AIM: NLG), a leading independent exploration
and production company operating in Kazakhstan, today announces improved field
performance following the difficult weather conditions encountered during the
first four months of 2005. Total net production has increased from 27,439
barrels of oil per day (bopd) on average during the first quarter to an average
of 27,867 bopd in April and further increased to an average of 31,799 bopd
through May. Individual field contributions are summarized below:
=====================================================================
(bopd) Q1 2005 April 2005 May 2005
average average average
---------------------------------------------------------------------
KOA - 50% 13,133 13,067 15,607
North Buzachi - 50% 5,650 5,442 5,842
Chaparral/KKM* - 76% 6,581 7,583 8,250
Arman - 50% 2,075 1,775 2,100
---------------------------------------------------------------------
Total 27,439 27,867 31,799
=====================================================================
* Chaparral/KKM figures are consolidated on a 100% basis for financial
reporting purposes; however, Nelson's net equity interest after
minority interest is 76%.
The increase in production at Kazakhoil Aktobe (KOA) resulted from the
successful completion of four new wells during April and May, which are
presently contributing an additional 4,400 bopd to production. Furthermore, KOA
has increased the capacity of its processing facilities as part of the ongoing
upgrade to 45,000 bopd, which will be completed at the end of June. Well A210
was converted to water injection in April and this has increased reservoir
pressure support, which in conjunction with paraffin management and a
successful stimulation program, has contributed to the production increase. In
the Kozhasai field, KOA has continued to build processing facilities and is
accelerating plans to build an export line and a bridge required to access the
northern part of the field. Presently there are four rigs drilling in the
Alibekmola field and one rig drilling in the Kozhasai field. To further
accelerate production, KOA is in the process of reviewing options to mobilize
two additional rigs by the end of the third quarter of 2005.
Currently the North Buzachi field well production capacity is higher than its
processing capacity, and therefore production is restricted. However, a central
processing facility upgrade, to 20,000 bopd, will be completed in June and,
with the completion of a new export pipeline in September, production capacity
will be further increased to 26,000 bopd. In anticipation of this increased
processing capacity, North Buzachi has contracted two additional rigs, which
will start drilling at the end of June and July respectively. Additionally,
North Buzachi is reviewing bids for two more rigs, which will increase the rig
count to five, by the end of the third quarter. This should allow North Buzachi
to meet its goals of drilling 90 to 100 new wells this year and to achieve
production objectives for the year.
While in the process of completion of upgrades to it own facilities, North
Buzachi continues to use the processing facilities at the Arman field. Arman as
a mature field remains a steady producer, though its April production levels
where affected by maintenance to its pipeline and pumps.
The increase in KKM's production is the result of the successful ongoing one
rig drilling program, which since the end of March, has completed three wells
that are producing a total of 1,150 bopd. Additional production has been
realized by increased production efficiency due to conversions to artificial
lift and production optimization.
Nelson's Chief Operating Officer, Simon Gill, provided his assessment: "We have
a tremendous amount of activity in the field now that better weather conditions
have arrived. I am satisfied with May's operating results. Production is
increasing across all group properties. We are successfully increasing the
number of drilling rigs under contract and I am pleased with the new wells
drilled in Alibekmola, Kozhasai, North Buzachi and Karakuduk. Production
optimisation, specifically artificial lift, stimulation and paraffin control,
have shown good results. Additionally, pressure maintenance has been initiated
in all fields. Although conversion of producing wells to water injectors
detracts from the number of producing wells, we expect to see continued
increases in production levels and higher recovery. While there is strong
demand for oil field supplies and services, we have been able to meet the
requirements of our work programs and do not foresee problems in this area."
For further information, please contact:
---------------------------------------
Fred Hodder, Senior Vice President Tel: 020 7495 8908
Nelson Resources Limited fhodder@nelsonresources.co.uk
Investor Relations
Ann-marie Wilkinson / Nick Lambert Tel: 020 7861 3232
Bell Pottinger Corporate & Financial
(London)
Notes
-----
Nelson Resources Limited is an oil exploration and production company with
operations in the Republic of Kazakhstan. The Company established its presence
in the Kazakhstan oil sector in 2000 and its management team, comprising both
international and Kazakh executives, has extensive experience of the Kazakh
operating and regulatory environment. The Company owns 50% of Kazakhoil Aktobe
LLP (KOA), a 50/50 joint venture between Nelson and Kazmunaigas, the national
oil company of Kazakhstan, which is developing the Alibekmola and Kozhasai
fields. The Company owns a 50% participatory interest in the North Buzachi oil
field located in western Kazakhstan (50% Nelson, 50% CNPC International
(Buzachi) Inc.). In May 2004, Nelson purchased 60% of Chaparral Resources Inc.,
which has a 60% interest in the joint stock company Karakudukmunai, operator of
and owner of a 60% interest in the Karakuduk field. In January of 2005, Nelson
acquired the 40% interest in this field previously owned by Kazmunaigas,
bringing the Company's aggregate ownership interest in the field to 76%. In
February 2005, the Company also acquired a 50% interest in the Arman field,
with the other 50% held by Shell. The Company also holds an option to acquire a
minimum 25% participatory interest in two Caspian Sea offshore blocks, Zhambai
South and South Zaburunye. The Company maintains its operational office in
Almaty, Kazakhstan, which oversees the field joint ventures in western
Kazakhstan. Nelson and its affiliated companies employ approximately 1,100
people. Common shares of Nelson are listed on the Toronto Stock Exchange and
London's Alternative Investment Market under the symbol NLG.
Further information on Nelson Resources can be found on the Company's website at
www.nelsonresources.com.
Readers are cautioned that the preceding statements and information may include
certain estimates, assumptions and other forward-looking information. The
actual future performance, developments and/or results of the corporation may
differ materially from any or all of the forward-looking statements, which
include current expectations, estimates and projections, in all or part
attributable to general economic conditions and other risks, uncertainties and
circumstances partly or totally outside the control of the corporation,
including oil prices, imprecision of reserve estimates, drilling risks, future
production of gas and oil, rates of inflation, changes in future costs and
expenses related to the activities involving the exploration, development,
production and transportation of oil, hedging, financing availability and other
risks related to financial activities, and environmental and geopolitical
risks. Discussion of the various factors that may affect future results is
contained in the corporation's recent filings with Canadian securities
regulatory authorities. The corporation disclaims any intention or obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
END
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