Xtract Energy’s Turkish JV Extrem moves on after Alasehir-1 well testing mired by problems

Xtract Energy PLC (AIM: XTR) said its Turkish joint venture group Extrem Energy AS, in which it holds 34 percent, yesterday suspended testing work on the Alasehir-1 well which was re-entered in September, as  conditions encountered were worse than expected and several  attempts to repair the cement  bonds were unsuccessful. 

Some oil and water was produced from early attempts at production testing in two of the five targeted intervals, but poor well conditions meant that it was not possible to determine with any confidence the actual composition of the reservoir fluids.

Extrem Energy will review alternative approaches for the exploration and appraisal of the Alasehir part of the field in light of this development, and it has decided to next drill a new well Sarikiz-3 on the Sarikiz part of the field rather than carry out the previously announced re-entry of East Sarikiz-1.

This will enable the drilling rig to catch up time lost at Alasehir-1. If it is decided to re-enter East Sarikiz-1 at a later date, a cheaper work-over rig may be used. An update on plans for Sarikiz-3 will be provided as soon as possible, Xtract said.

On a more positive note, preparation for commercial production from Sarikiz-2 has advanced considerably since the last update at the end of August 2009. Separation and storage facilities required at the well site are in place and discussions with the Tupras refinery at Izmir have confirmed their willingness and ability to buy the crude oil produced.  The  necessary  government   permits  for  extended  test production are expected to be in place  to enable production  to  commence  in  the  second  half  of  November.

Xtract identifies and invests in a diversified portfolio of early stage energy sector technologies and  businesses with  significant growth  potential. 

Extrem Energy is Xtract’s exploration and production joint venture with Merty Energy of Turkey.  Extrem Energy has a portfolio of licence interests including the high potential prospect at Candarli Bay in south-west Turkey.

Xtract also owns 36.8 percent of Elko Energy Inc, a Canadian registered oil & gas exploration company which has interests in exploration and production licences in the Danish and Dutch North Sea. Its major asset is in the Danish North Sea: an 80 percent interest on 26 offshore blocks in a 5,400 square kilometres exploration and production licence close to the prolific Central Graben oil field. Elko also holds a 60 percent operating interest in gas-bearing license blocks P1 and P2 in the Dutch North Sea.

Zhibek Resources, 25 percent owned by Xtract, is an oil and gas exploration and production company with a 72 percent interest in the Tash Kumyr and Pishkoran exploration licences in the Kyrgyz Republic.

Xtract's wholly owned subsidiary Xtract Oil Ltd is focused on the development of the company's oil shale resources in Australia and the technology for oil extraction from oil  shale resources. Xtract has oil shale exploration rights over mining tenement in the Julia Creek area of Queensland. In addition to evaluating third party technologies, XOL has been  developing  proprietary technology for the  commercial extraction of liquid hydrocarbon products from oil shale.

Finally, Xtract Energy (Oil Shale) Morocco SA is a 70:30 joint venture with Alraed Ltd Investment Holding Company WLL, a company controlled by Prince Bandar Bin Mohammed Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed a Memorandum of Understanding with the Moroccan oil and mining ministry regatrding the evaluation and possible development of an oil  shale deposit near Tarfaya.