Caracal Energy Provides Operational Update

New Discovery at Krim & Spudding of Bitanda Exploration Well

Production Surpasses 11,000 bopd

2014 exploration program targeting one billion barrels

CALGARY, Dec. 9, 2013 /CNW/ - Caracal Energy Inc. (LSE:CRCL) ("Caracal Energy" or the "Company") provides an operational update on its activities in Chad, which includes announcing a new discovery at Krim and the spudding of the Bitanda exploration well.

Executive Summary

  • Production ramped up significantly, delivering in excess of 11,000 gross barrels oil per day ("bopd")

  • On track to achieve first oil lift in Q1 2014 and significant production increases in the coming months

  • Mangara-5 development well delivered highest test flow rates seen on the Mangara field; completed as a producer. Maximum combined production rate for the Cretaceous C and E sands exceeded 5,000 bopd

  • Krim-1 Cretaceous E sands flow tested at up to 2,580 bopd

  • Successful test of Krim's Cretaceous C and D sands should deliver an increase in reserves

  • Bitanda exploration well spudded; targeting gross unrisked prospective resource of 277.2 - 648.3 million barrels ("mmbbl")

  • Mobilization underway to increase drilling rig count from 2 to 6 rigs by end 2014

  • 2014 exploration program will target 1 billion barrels of gross unrisked prospective resources

Gary Guidry, Chief Executive Officer, said:

"We are on schedule for first revenue which is expected in Q1 2014. Our team, along with partners GlencoreXstrata and Société des Hydrocarbures du Tchad, have done an exceptional job of establishing continuous production into the ETS. Our development drilling and construction of additional facilities and transportation infrastructure has also continued, and we are on track to provide additional production from Badila and Mangara fields in the coming months.

In addition to the significant production increases expected next year, we plan to test over a billion barrels in unrisked prospective resources in 2014 through our high impact exploration program."

Production

Since achieving first oil on September 30, 2013 the Company completed the commissioning and site acceptance testing of the lease accounting custody transfer metering ("LACT"). The LACT measures oil quality and volume, prior to delivery into the Export Transportation System ("ETS") operated by TOTCO/COTCO. Since completing the commissioning the Company has ramped up production significantly, and recently, continuously delivering in excess of 11,000 bopd.

Highlights of recent production performance are as follows (all gross amounts):

  • 255,778 gross barrels of oil delivered during November
  • 354,530 gross barrels of oil delivered into the ETS as of December 7, 2013
  • November 2013 average production of 8,526 bopd
  • 11,124 bopd current production; averaged 11,138 bopd last 10 days

Current production is being used for pre-revenue pipeline fill line, now 76% per cent complete, and the Company is on track to achieve its first lifting of oil in Q1 2014.

Additional fluid processing and shipping facilities are currently being commissioned with additional production from the Badila field scheduled to come on stream this month. Caracal Energy expects significant further increases in production during 2014 from Badila as well as from the nearby Mangara field.

Exploration and Development

The Company has commenced the mobilization process for an additional four drilling rigs, bringing the total rig count to six drilling rigs by the end of 2014. In addition, two completion rigs will be mobilized during 2014, bringing the total completion rig count to three.  In total, the Company anticipates targeting over a billion barrels of unrisked prospective resources in 2014.

Krim: Exploration well a new discovery

Krim exploration well ("Krim-1") was declared a discovery on November 4, 2013. The Krim field is located immediately southwest of the Mangara field, and the targeted zones were the Cretaceous C, D and E sands.

Due to the proximity to infrastructure, the Company and its partners believe they can fast track Krim's development. Depending on routing, Krim-1 is approximately 5-10 kilometers from the pipeline at Mangara.

Pre-drilling, Krim gross unrisked prospective resource as per McDaniel & Associates Ltd. resources evaluation dated June 30, 2013 ("McDaniel Resource Report") were 29-64 mmbbl on unrisked Pmean and P10 basis, respectively.

The Cretaceous E sands were tested at up to 2,580 bopd over the following intervals:

Interval
(mKB)
Maximum Oil
Rate
(bopd)
Flowing
WHP
(psig)
Choke
Size
(in.)
Total Flow
Duration (hr)
Gas-Oil
Ratio
(scf/stb)
Gravity
(Deg API)
Productivity
Index
(bopd/psi)
E (2,581.5 -
2,630)
2,580 120 64/64 28.8 100 34 - 37 4.3

The McDaniel & Associates Ltd. reserves evaluation dated September 30, 2013 ("McDaniel Reserves report"), attributed gross 2P reserves of 6.0 mmbbl to Krim's E sands, with gross 3P reserves of 10.1 mmbbl.

The well was suspended following the Cretaceous E sands test, as the completion rig was required to test and complete Badila-4 (below) for production. The completion rig has now returned to Krim to complete the testing of the Cretaceous C and D sands later this month. The estimated pay from petrophysical information is 45.5 meters for the C sands and 105 meters for the D sands.  Upon a successful test from the C and D sands, the Company expects an increase in reserves as currently no reserves are assigned to these sands. This will require the construction of a 5-10 km tie-in to the existing Mangara-Badila pipeline.

Bitanda: Exploration Well

The Bitanda exploration well ("Bitanda") was spudded on December 5, 2013. The planned total drilling depth is 2,390 meters and drilling is expected to take 32 days. The current operation is drilling at 700 meters.

Bitanda is the third exploration test well following the recent success at Krim and the Cretaceous E sands in the Mangara field. Bitanda was recently confirmed as a structural three-way closure, bounded by the basin margin fault using the 3D seismic shot earlier this year.  Pre-drill, McDaniel Resource Report estimated gross unrisked prospective resource of 277.2-648.3 mmbbl on unrisked Pmean and P10 basis, respectively.

Bitanda is approximately 19 kilometers from the Badila field, and pipeline connection.

Mangara-5: Combined Development and Exploration Drilling

The Mangara-5 well was spudded on May 16, 2013 and drilled to a total depth of 3,339 meters. The primary objective of the well was to deliver production from the Cretaceous C sands. The secondary objective was to flow test and evaluate the prospective resource of the Cretaceous E sands, located in the eastern fault block of the Mangara field. Pre-drill McDaniel Resource Report attributed gross unrisked prospective resource of 24.6-58.0 mmbbl on Pmean and P10 basis, respectively, to the eastern fault block.

Prior to completing the well as a Cretaceous C sands producer, well testing confirmed the light oil production potential of the Cretaceous E, with testing results as follows:

Interval
(mKB)
Maximum Oil
Rate
(bopd)
Flowing
WHP
(psig)
Choke
Size
(in.)
Total Flow
Duration (hr)
Gas-Oil
Ratio
(scf/stb)
Gravity
(Deg API)
Productivity
Index
(bopd/psi)
E (2,474 - 2,669) 1,917 160 64/64 53 100 35 - 39 1.7
C (1,896 - 2,103.5) 3,200 200 80/64 45.3 540 35 - 37 2.2

The test rates from both the C and E sands are the highest test rates achieved by the Company and past operators to date on the Mangara field. The well has been initially completed as a Cretaceous C sands producer. Caracal's net interest in the Mangara field is 50%.

Mangara-6: Combined Development and Exploration Drilling

The Mangara-6 well was spudded on November 19, 2013. The planned total drilling depth is 3,302 meters and drilling is expected to take 50 days. The current operation is coring the Cretaceous C sands at 2,081 meters.

Mangara-6 has a primary objective of developing Probable reserves in the Cretaceous C sands. After the recent exploration success of the Cretaceous E in Mangara-5, the Mangara-6 well will be drilled to basement to test additional prospective resources in the western fault block of the Mangara field.  Pre-drill, McDaniel Resource Report estimated gross unrisked prospective resource for the western fault block of 14.5-35.2 mmbbl on Pmean and P10 basis, respectively.

Kibea and Beche: Seismic Acquisition

The Company has started mobilizing a seismic contractor to shoot 2D and 3D seismic.  Much of the planned 1,500 line-kilometers of 2D seismic will be focused on well placement for structures to be drilled in the 2014-2016 exploration programs as well as identifying additional prospects currently not captured in the Company's estimates.

Of the planned 700 square kilometers ("Km2") planned for 2014, 400 Km2 will be focused on the Kibea discovery and nearby Beche exploration area, which includes three prospects similar to the discovery at Kibea. Kibea is a light oil discovery (33 - 35 degrees API) with 45.9 mmbbl of gross 2P reserves, and 105.0 million barrels of gross 3P reserves according to the McDaniel Reserves Report1. According to the McDaniel Resource Report, gross prospective resources below the Kibea discovery are 20.0-38.4 mmbbl on Pmean and P10 basis, respectively.

The nearby exploration prospects Beche, Beche-B and Beche-C have gross unrisked prospective resource estimates as follows:

Prospect P90
(MMbbl)
P50
(MMbbl)
Pmean
(MMbbl)
P10
(MMbbl)
Beche 38.8 116.1 169.7 358.0
Beche-B 25.4 79.3 116.8 244.2
Beche-C 32.7 95.9 141.5 300.8
TOTAL     428.0  

Logistics preparation and execution is underway to move a drilling rig to the Kibea - Beche area by May 2014 to drill 3-4 wells by November 2014. Beche is on the proposed pipeline route to develop the Kibea field.

Badila-4: Development drilling

The Badila-4 appraisal well was drilled to a total depth of 2,272 meters and suspended for testing and completion. As petrophysical information from the primary target Cretaceous D was preliminarily interpreted as disappointing, the McDaniel Reserves Report required for the recent financing, assumed the well would be wet (100% water) and downgraded Cretaceous D sands reserves accordingly.

Subsequent to the McDaniel Reserves Report, the testing results of the Cretaceous D sands is as follows:

Interval
(mKB)
Maximum Oil
Rate
(bopd)
Flowing
WHP
(psig)
Choke
Size
(in.)
Total Flow
Duration (hr)
Gas-Oil
Ratio
(scf/stb)
Gravity
(Deg API)
Productivity
Index
(bopd/psi)
D (1841 - 1893) 234 5 64/64 51 Not
measured
37 2.5

This encouraging test will be used to re-evaluate the potential D sands oil reserves in the Badila-4 area as a part of the yearend reporting cycle.

An encouraging new secondary oil zone in the Upper Cretaceous A sands was also tested in Badila-4. This zone has been extensively mapped in the Badila field development area using the new 3D seismic information, and Badila-4 is the first test of this new reservoir.

The testing results of the Upper Cretaceous A sands are summarized below:

Interval
(mKB)
Maximum Oil
Rate
(bopd)
Flowing
WHP
(psig)
Choke
Size
(in.)
Total Flow
Duration (hr)
Gas-Oil
Ratio
(scf/stb)
Gravity
(Deg API)
Productivity
Index
(bopd/psi)
A (1017 - 1040) 743 45 48/64 58 Not
measured
22 2.5

The A sands are located at approximately 1,030 meters and will be lower cost to develop.  The well was subsequently completed for production from the Upper Cretaceous A.

Badila-5: Development drilling

The Badila-5 well was drilled to a total depth of 2,066 meters. Company analysis of the petrophysical results from the well suggests net pay of 64.4 and 58.4 meters in the Cretaceous C and D sands, respectively.

The testing results of the Cretaceous C sands are as follows:

Interval
(mKB)
Maximum Oil
Rate
(bopd)
Flowing
WHP
(psig)
Choke
Size
(in.)
Total Flow
Duration (hr)
Gas-Oil
Ratio
(scf/stb)
Gravity
(Deg API)
Productivity
Index
(bopd/psi)
C (1,441 - 1,497) 3,114 155 64/64 58 26 34 - 35 18.1

The well was subsequently completed for production from the Cretaceous D, and with artificial lift-assist expected to produce in excess of 5,000 bopd. Both Badila 4 and 5 are expected to commence production before year-end.

Construction Projects

Mangara Development

The 97 kilometers of 12" oil and 6" natural gas shipping pipelines from Mangara to Badila are nearing completion. Final hydro testing is expected to be completed by the end of December. Accommodation for the approximate 10-kilometer natural gas spur pipeline, to supply the new natural gas powered electrical generation station for the city of Moundou, is in place.  The spur will be completed in 2014 as an integral component of the electrical power generation construction and commissioning project.

Commissioning of the Mangara field central processing facility ("CPF") and the southern processing terminal ("SPT") is underway. The SPT is scheduled to be completed during December and will temporarily process additional Badila crude oil until the Badila expansion is completed and the Mangara field is brought on stream during the first half of 2014.

Blending and Shipping Terminal

Commissioning of the blending and shipping terminal is underway, and expected to be on-stream in December. The terminal is owned and operated by PetroChad Transportation Company ("PCT"), which is owned by Caracal Energy (66 2/3%) and GlencoreXstrata (33 1/3%).

PCT operates under an Inland Transportation Authorization, as prescribed in the Production Sharing Contracts. The terminal will be able to blend and ship 25,000 bopd until the second half of 2014, when the expansion to 50,000 bopd will be completed.

About Caracal Energy Inc.

Based in Canada, Caracal Energy Inc. is an international exploration and development company focused on oil and gas exploration, development and production activities in the Republic of Chad, Africa. In 2011, the Company entered into three production sharing contracts ("PSCs") with the government of the Republic of Chad. These PSCs provide exclusive rights to explore and develop reserves and resources over a combined area of 26,103 km2 in southern Chad. The PSCs cover two world-class oil basins with oil discoveries, and numerous exploration prospects.

The Company's shares trade on the London Stock Exchange under the symbol CRCL.


Cautionary Statements

Certain information in this press release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information and statements are often, but not always, identified by the use of words such as "anticipate", "seek", "believe", "expect", "hope", "plan", "intend", "forecast", "target", "project", "guidance", "may", " might", "will", "should", "could", "estimate", "predict" or similar words or expressions suggesting future outcomes or language suggesting an outlook. Specific forward looking statements included in this press release include comments related to the expected timing of pipeline completion and facilities advancement; potential production rates; timing of the pipeline-fill and tie-in for production; expected completion of well servicing operations; additional development of the Mangara and Badila field; expected drilling of the other prospects; and other matters. Subject to applicable securities laws, the Company does not undertake any obligation to revise this forward-looking information or these forward-looking statements to reflect subsequent events or circumstances. The forward-looking information and statements contained in this press release are expressly qualified by this cautionary statement. Well-test results and production rates are not necessarily indicative of long-term performance or of ultimate recovery.

_________________________
1 McDaniel Report effective September 30, 2013




 

SOURCE Caracal Energy Inc.

For further information:

Caracal Energy Inc.
Gary Guidry, President and Chief Executive Officer
Trevor Peters, Chief Financial Officer
403-724-7200

Longview Communications - Canadian Media Enquiries
Alan Bayless
Joel Shaffer
604-694-6035
416-649-8006

FTI Consulting - UK Media Enquiries
Ben Brewerton / Ed Westropp / Georgia Mann
+ 44 (0) 207 8313 3113
caracalenergy.sc@fticonsulting.com