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Roxi Petroleum: Update on operations at BNG

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Oilfield Technology,

Deep Well 801

Deep Well 801 was spudded on 15 December 2014 with a planned Total Depth of 4950 m. The well is located approximately 8 km from Deep Well A5 and was planned to target the same structure as Deep Well A5 in the Middle and Lower Carboniferous. The well was drilled by Sinopec, the Chinese multinational, at a fixed cost of US$11 million.

As previously reported core samples and logging have revealed a potentially oil bearing interval starting from 4536 m and extending 100 m. The pressure and temperatures encountered indicate this well is unlikely to be connected to the reservoir targeted by Deep Well A5. Therefore should Deep Well 801 prove commercially viable it would be a separate discovery to the potential discovery previously announced in connection with Deep Well A5.

The well has been drilled to a total depth of 5050 m and five potential levels for production have been identified below the salt layer. Since the previous update the lowest two of these levels have been perforated (4822 m and 4896 m).

Testing has commenced at the well at the perforated levels with gas detected and oil shows. The well has been closed to allow pressure to increase. We expect to reopen the well in the next few days and are hopeful that at that time oil will flow naturally to the surface.

Current production

Aggregate production from shallow wells 54, 805, 806, 807 and 143 is some 453 bpd (265 bpd net to Roxi). Additionally Munaily continues to produce at the rate of 145 bpd (85 bpd net to Roxi).

Under the terms of the BNG licence all production is sold a domestic price, which is currently US$10 p/barrel.

Proceeds from the sale of Galaz

Roxi is also pleased to report that the full amount of the proceeds due from the sale of its interests in Galaz have now been received.

Of the US$100 million gross sales price some US$23 million was attributable to Roxi with a further US$11 million attributable to Baverstock, Roxi's partner across the Eragon assets, including BNG. Accordingly the full US$34 million expected from the sale of Galaz is available to develop BNG.

Clive Carver, Chairman said:

We continue to make steady progress across our three active wells. A positive outcome at any one of these will be major step forward for the Company and we look forward to updating the market with further news in due course.

It is also pleasing to have collected the full amount due from the sale proceeds at Galaz. These funds can now be put to work further developing BNG".

Adapted from a press release by Louise Mulhall

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