Arawak operational update: Production rises as Kazakhstan drilling gets underway



    LSE & TSX TRADING SYMBOL: AAK

    JERSEY, Channel Islands, Oct. 16 /CNW/ - Arawak Energy Limited ("Arawak
or the "Company") announces that the Company's net production has risen to
approximately 12,750 barrels of oil per day ("bopd") following a rise in
produced volumes at the Akzhar and Besbolek fields in Kazakhstan.
    Production at the Company's two main producing assets in Kazakhstan had
been constrained in previous months while we sought regulatory approval for
the transition of the contracts from the exploration phase to the production
stage. Arawak announced on 25 September 2008 that the government regulatory
authority in Kazakhstan, the Central Committee for Development, had approved
the technical plans of development for both fields, allowing us to immediately
begin work on the development phases.
    The Company embarked on a re-entry programme to rejuvenate shut-in
production, which has already resulted in an increase in flow rates at both
Akzhar and Besbolek. Concurrently, four rigs were mobilised to pursue an
aggressive ten-well development drilling programme at each field for the
remainder of the year. All four rigs have already commenced drilling at Akzhar
and Besbolek.
    Alastair McBain, Arawak's President and Chief Executive Officer,
commented: "In just a few weeks after receiving the approvals we have seen an
improvement in our production rates and we expect this to continue at a steady
pace until the end of the year. The speed at which we were able to mobilise
the drilling rigs and the rig crews is a testament to the planning,
preparation and execution skills of our staff in Kazakhstan."

    Kazakhstan

    The Company has been successful in its application for the cancellation
of the export customs duty applied to its Akzhar contract and we are currently
awaiting confirmation on the amounts and process of reimbursement. Exports
from the Besbolek field will continue to be subject to export customs duty. As
announced by the government of Kazakstan in September, the export customs duty
increased to $203.8 per tonne from $109.9 per tonne effective 11 October.
Besbolek accounts for 23% of Arawak's current net production in Kazakhstan.
    In other operations, production at the 40% owned Saigak field was steady
at 1,180 bopd net to Arawak.
    In the East Zharkamys III exploration block, the Utubai 1 well
encountered 40 metres of prospective gas pay in the Barremian formation at a
depth of 342 metres. Casing has been set for future resource testing. Two
wells drilled earlier this year were plugged and abandoned with no significant
hydrocarbons detected. In total, five wells are scheduled for drilling on the
East Zharkamys III block in 2008 as required under the work commitment
programme prior to our plans to acquire seismic data. A seismic crew has now
been mobilised to the area and has commenced pilot testing for a 530 km 2D
seismic programme scheduled in the second half of October.
    At the recently acquired Tamdykol exploration block, the Company is
finalising the programme for a 220 km 2D seismic survey in the fourth quarter.
At the Alimbai producing block, processing of the seismic data from the
27 sq km 3D and 200 km 2D programme undertaken in the second quarter is
scheduled to be completed by the end of October.

    Russia

    In the North Irael block, offset well 641, which commenced drilling in
the second quarter, encountered oil at a deeper horizon than previously
discovered. This has confirmed a lower oil/water contact and is therefore
expected to add additional reserves to the field as well as proving up oil in
the expected productive horizon. The well, which is offset to exploration well
64, is producing approximately 250 bopd of natural flow from the new horizon.
Presently we are drilling well 642, the second delineation test in the pool.
    In the Sotchemyu-Talyu area, drilling is continuing at the 128
development well, which tested oil on drill stem test in the upper F2
interval, a shallow Devonian horizon above the original target Fo interval.
The Company has drilled and completed eight wells in Sotchemyu-Talyu so far in
2008 with seven considered commercial successes and one awaiting workover
activities. Work is expected to start in the fourth quarter on an inter-field
pipeline to tie North Irael production into the central processing facilities
at Sotchemyu-Talyu.
    At the Company's two other contract areas in Russia, a seismic crew has
been mobilised to the South Sotchemyu appraisal block in preparation for a
115 km 2D seismic acquisition programme in the fourth quarter. A 40 sq km 3D
seismic programme was completed at South Sotchemyu earlier this year. In
addition, a 100 km 2D survey is scheduled in the coming winter months at the
Kymbozhyuskaya exploration block ahead of drilling of exploration well 11 in
February 2009.


    Notes to editors

    Arawak's Common Shares are listed for trading on both the TSX and the LSE
under the symbol "AAK". The Company is engaged in the exploration, development
and production of oil and natural gas in Kazakhstan, Russia and Azerbaijan. In
Kazakhstan, the Company holds five producing fields and two exploration
blocks. The Company has a 40% participating interest in the Saigak producing
block acquired in June 2008. The remaining assets are held through its 100%
wholly-owned subsidiary Altius Energy Corporation ("Altius"). Altius' main
producing field is Akzhar with smaller fields at Besbolek, Karataikyz and
Alimbai. The two exploration blocks East Zharkamys III and Tamdykol are also
situated in western Kazakhstan. Arawak's producing assets in Russia are held
through ZAO PechoraNefteGas ("PNG") and LLC NK Recher-Komi ("Recher-Komi"), in
which Arawak has a 50% interest with the remaining interest being held by
Lundin Petroleum AB. Also in Russia, Arawak holds a 100% interest in the
Kymbozhyuskaya exploration block and in the South Sotchemyu appraisal block.
In Azerbaijan, the Company's asset is its interest in the Exploration
Development and Production Sharing Agreement ("EDPSA") for the South West
Gobustan oil and gas fields. CGL, a company registered in Anguilla, British
West Indies, in which the Company has a 37.17% interest, holds an 80% interest
in the EDPSA with the remaining 20% held by an affiliate of SOCAR. The
remaining 62.83% share in CGL is held by two affiliates of the project
operator, CNPC.
    This announcement includes "forward-looking statements", including
statements with respect to Arawak's anticipated exploration and development
activities which are based on the opinions and estimates of management at the
date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements.
These risks and uncertainties include, but are not limited to, risks
associated with the oil and gas industry (including operational risks in
development, exploration and production; delays or changes in plans with
respect to exploration or development projects or capital expenditures; the
uncertainty of reserve estimates; the uncertainty of estimates and projections
in relation to production, costs and expenses and health, safety and
environmental risks), the risk of commodity price and foreign exchange rate
fluctuations, the uncertainty associated with commercial negotiations and
negotiating with foreign governments and risks associated with international
activity. Although Arawak believes that its expectations represented by these
forward-looking statements are reasonable, there can be no assurance that such
expectations will prove to be correct. Due to the risks, uncertainties and
assumptions inherent in forward-looking statements, prospective investors in
the Company's securities should not place undue reliance on these
forward-looking statements. For a detailed description of the risks and
uncertainties facing Arawak, readers should refer to Arawak's Annual
Information Form for the year ended 31 December, 2007 and dated 31 March, 2008
as filed at www.sedar.com.





For further information:

For further information: Arawak Energy Limited, Tanya Pang, Head of
Investor Relations, E-mail: info@arawakenergy.com, Tel: +44 (0) 20 7973 4285,
Fax: +44 (0) 20 7824 8466, Web: www.arawakenergy.com; Brunswick Group LLP,
Patrick Handley, Tel: +44 (0)20 7404 5959; JPMorgan Cazenove Limited, Steve
Baldwin, Neil Haycock, Tel: +44 (0)20 7588 2828; Oriel Securities Limited,
Richard Crawley, Natalie Fortescue, Tel: +44 (0)20 7710 7600

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