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CanArgo Energy Corporation
FOR IMMEDIATE RELEASE IN EUROPE & NORTH AMERICA
M11Z Appraisal Well Reaches TD
August 26, 2005 - Tbilisi, Georgia - CanArgo Energy Corporation ("CanArgo")
(OSE: CNR, AMEX:CNR) today announced that the Manavi appraisal well, M11Z, has
reached a total depth (TD) of 4,570 metres (14,993 feet) and is being prepared
for testing.
The primary Cretaceous limestone target was encountered at 4,277 metres (14,032
feet) measured depth (MD), some 70 metres MD higher than in this original M11
well. The M11Z well has been deviated to a location some 600 metres (0.37 miles)
away from the original hole. Drilling data and slim hole wireline logs indicate
the presence of hydrocarbons. The secondary Middle Eocene target zone (which is
the main reservoir in the Ninotsminda and Samgori Fields) which was encountered
at 3,965 metres (13,009 feet) MD, was also significantly higher than in the M11
well, and with a much thicker section, also with hydrocarbons being indicated
from drilling data and slim hole wireline logs. The Middle Eocene and Cretaceous
reservoirs appear to be part of the same pressure system.
The original production test on the Manavi M11 discovery well in 2003 was
prematurely terminated due to the collapse of the production tubing due to
pressure during testing. Prior to this, during the initial clean-up, good flow
rates were observed from the well, although un-metered, with 34.4(0) API oil
being recovered. CanArgo believes that the M11 Cretaceous oil discovery has
potential to be one of the most significant oil discoveries made recently in the
Southern Caucasus. Over 150 metres (490 feet) of hydrocarbon bearing Cretaceous
limestone reservoir was encountered, with the top at 4,348 metres (14,265 feet).
At M11Z, the small hole size has prevented the running of a normal open hole log
suite to ascertain reservoir characteristics and hydrocarbon saturations.
Nonetheless a Pulsed Neutron Neutron log suite has been run which indicates the
presence of hydrocarbons. However these data require confirmation from the
planned flow test. Currently a pre-perforated 27/8 inch (73 mm) liner is being
prepared for the test. Testing is expected to commence during September once the
rig is demobilised and testing equipment installed.
The Saipem Ideco E-2100Az drilling rig (equipped with a top-drive drilling
system and using a Baker-Hughes oil-based mud system) is now being mobilised to
the MK72 Norio exploration well. The UralMash Rig which has been drilling this
well has had difficulty drilling through a highly over-pressured section of
swelling clays above the prognosed target zone and the Saipem Rig with its
oil-based mud system has successfully drilled through a similar section in the
M11Z well. It is planned to
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use the Saipem rig to drill to the prognosed target zone, which should take
approximately one month from when drilling commences in late September. Given
success it would be planned to run 5 inch (127 mm) casing at the top of the
target zone and then move the Saipem rig to commence drilling of the Manavi M12
appraisal well (the second appraisal well on the Manavi discovery), using the
UralMash rig with Baker-Hughes slim hole drilling equipment to complete the MK72
well.
On the Ninotsminda Field CanArgo Rig #2 has been mobilised to the N100 well
location to commence drilling of a new horizontal development well (N100H2). The
Baker-Hughes directional drilling equipment required to commence drilling
operations is expected to arrive in Georgia within the next month.
In Kazakhstan, CanArgo currently owns interests in the proven Kyzyloy Gas Field,
and in large exploration areas in the western part of the country close to the
Aral Sea.
The first of the five exploration wells (AKK103) planned on the Akkulkovsky area
has reached TD and wireline logs indicate the presence of gas bearing sands in
the well. Casing has been run and the well suspended for a planned production
test in late September, as part of a broader testing program including wells on
the Kyzyloy Field. The rig is now being moved to the next location (AKK105), and
it is planned to mobilise a second drilling rig to accelerate the exploration /
appraisal program.
Dr. David Robson, Chief Executive Officer said, "We are very pleased to have
reached TD successfully on the M11Z appraisal well. We now look forward with
great anticipation to the testing program and the results, which we should have
in September."
CanArgo is an independent oil and gas exploration and production company with
its oil and gas operations currently located in the Republic of Georgia and the
Caspian area.
The matters discussed in this press release include forward-looking statements,
which are subject to various risks, uncertainties and other factors that could
cause actual results to differ materially from the results anticipated in such
forward-looking statements. Such risks, uncertainties and other factors include
the uncertainties inherent in oil and gas development and production activities,
the effect of actions by third parties including government officials,
fluctuations in world oil prices and other risks detailed in the Company's
reports on Forms 10-K and 10-Q filed with the Securities and Exchange
Commission. The forward-looking statements are intended to help shareholders and
others assess the Company's business prospects and should be considered together
with all information available. They are made in reliance upon the safe harbor
provisions of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The Company cannot give
assurance that the results will be attained.
For more information please contact:
CANARGO ENERGY CORPORATION
Julian Hammond, Investor Relations Manager
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Tel: +44 7740 576 139
Fax: +44 1481 729 982
e-mail: info@canargo.com
NORWAY
Regina Jarstein
Gambit H&K AS
Tel: + 47 95213451
USA
Michael Wachs
CEOcast.com
Tel: +1 212 732 4300
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