Exploration History of Yasin Block

While the original oil producing well in Pakistan dates back to 1887, significant gas reserves were not discovered in Pakistan until 1952, when a gas discovery well was drilled on the Sui structure located in Balochistan Province. This early discovery resulted in estimated recoverable gas reserves of over 10 trillion cubic feet (“TCF”) or the equivalent of approximately 1 billion barrels of oil. The discovery in this area prompted the Pakistan government to make exploration agreements with several foreign oil companies during the period 1954-1959, including Standard-Vacuum Oil, Hunt International Oil Company, Shell Oil Company, Sun Oil Company and Tidewaterp[was named the Sui Gas Field. Additional significant gas discoveries resulted such as the Uch, Kandhkot and Mari fields. Significant oil discoveries in the Southern and Central Indus Basins in 1981 brought an even greater number of foreign exploration companies to Pakistan. The 1980’s, 1990’s and early part of this century saw additional large gas discoveries at Qadirpur (1989), Kadanwari (1989), Miano (1993), Sawan (1998), Bhit (1998), Mari Deep (1999) and Rehmat (2002). One such significant discovery in 1999 was the Zamzama Gas Field which is immediately south of the Zamzama North Block in which the Company currently holds a 2.5% convertible carried working interest operated by Heritage Oil.

The Yasin 2768-7 Block acreage, in which the Company holds an 18% royalty interest, has also been the subject of historical exploration.   In the 1950’s, Burmah Oil Company (predecessor to Pakistan Petroleum Ltd. (“PPL”) drilled two wells on acreage included within the current Yasin 2768-7 Block to just over 5,800 feet, each of which indicated gas and oil.  In the 1970’s, Amoco Oil drilled a 15,000 feet well which also demonstrated gas and oil.  In 1995 at the time of the original acquisition of this acreage block by Hycarbex-American Energy, Inc. (“Hycarbex”), which was then identified as the Jacobabad Block No. 2768-4, the seismic database was extremely limited, consisting of only a few old Amoco vibroseis lines.  In 1997, Hycarbex shot 262 km of new 2-D date and acquired the P9222 2-D line running north-south, just outside the eastern boundary of the concession and this data was processed.  The remaining Amoco vibroseis data and all the remaining ODGC 2-D lines (approximately 600 km) were not processed when acquired.  Hycarbex originally drilled four exploratory wells on the Block then known as the Jacobabad Block.  The first well was drilled in 1998 to a depth sufficient to test the primary producing zone in the region.  This well found natural gas in several zones and a drill stem test confirmed the presence of high-quality gas before operations were suspended.  At the time, equipment available on the well site was inadequate to deal with downhole problems.  The second well, drilled in a different portion of the block, encountered mechanical problems and did not reach sufficient depth to test any targeted formations.  The third well encountered large quantities of hydrogen sulfide and carbon dioxide, which appeared to be confined to a relatively small area around the wellbore. In July 2000, approximately 40km of new seismic was shot and processed, but the acreage comprising the block was so vast that early drillsite selection still involved some degree of speculation.  In 2001, Hycarbex drilled its fourth well which likewise indicated natural gas in the Sui Main and upper Chiltan formations, but did not result in a commercial completion.

Haseeb No. 1 Well

The Haseeb No. 1 Well was drilled on the Yasin Block 2768-7 by the Polish Oil and Gas Company for Hycarbex during March and April 2005 to a total depth of 4,945 feet (1,507 meters).  The well is located approximately 9 miles from the Hassan No. 1 well drilled by PPL and 5.6 miles from the City of Shikapur in the Sindh Province.  Open hole logs performed on the well demonstrated gas shows from 3,543 feet to 3,688 feet and a net pay thickness of 82 feet.  The drill stem test conducted over a short duration on a one-half inch choke indicated a production rate form the Sui Main Limestone equivalent to approximately 7.3 MM cubic feet of 805 BTU gas per day.  The gas was tested for carbon dioxide and water content and was found to have low levels of each, indicating a likelihood that processing will not be required prior to pipeline transmission. 

In the fall of 2005, Hycarbex completed the acidization of the Haseeb No. 1.  Post-treatment testing by Schlumberger Oilfield Services indicated an increase in the natural gas flow rate originally calculated at the time of the drill stem test at 7.3 million cubic feet per day.  Schlumberger further concluded that the 10 million cubic feet rate could be potentially increased to as high as 25-28 million cubic feet per day if the existing production tubing is replaced with higher diameter production tubing and if the wellhead pressure is maintained at approximately 1,000 psi.  This well was placed on line in February, 2010, upon completion, testing and calibration of the production gas treatment plant.

The Yasin Concession has ready access to pipeline infrastructure.  The 12-inch Quetta gas line runs NW-SE through the concession and connects to the 20-inch Sui-Karachi gas line.  The Karachi-Muzaffargarh oil line also runs through the southern portion of the Yasin block. 

Al-Ali No. 1 Well

Hycarbex drilled the Al-Ali No. 1 Well on the Yasin Concession in 2006. The drilling of Al-Ali #1 Well as an exploratory well was undertaken to fulfill the work obligations for the third contract year under the Concession License.  While gas shows were encountered during drilling, the gas volumes, on preliminary analysis, did not appear to be commercially viable and the well was plugged. 

Yasin Exploratory Well No. 1

The Yasin Exploratory Well No. 1 was commenced in November, 2008.  On September 28, 2009, Hycarbex announced the results of the drilling and its drilling analysis to date.  After drilling to the Sui Main Limestone, which was only one of the target zones for the well, mechanical difficulties were encountered in the hole.  The Sui Main Limestone showed strong intermittent gas during the drilling, but a steady flow was not achieved.  Hycarbex spent several months attempting to resolve the mechanical difficulties and considering alternative remedial operations while simultaneously evaluating the geologic data obtained from the drilling.  After evaluation, angular redrilling in the same wellbore and other remedial measures targeted at saving the wellbore were decided against because  the preliminary data collected by Hycarbex indicates that the drilling placement was not at the optimum position on the producing structure.  Hycarbex has  indicated that it plans to perform additional seismic to refine the preliminary data obtained from the drilling process.  According to Hycarbex, the drilling reaffirmed Hycarbex’s belief that the structure is very promising and thus a nearby replacement well is planned by Hycarbex during 2010 or 2011 after completion of the additional seismic.     
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