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Roxi Petroleum plc Down After Operational Update

Roxi Petoilroleum (LSE: RXP) this morning issued an operational update about the BNG Contract Area , in the west of Kazakhstan, in which it has a 58.41% interest. Roxi’s share price  is currently down 16.5% in trading so far today.

At the beginning of the month, Roxi announced that the thickness of the gross oil-bearing interval in its flasghip A5 deep well, which starts at 4,332m, was at least 105m, between 4,332m and 4,437m.

For safety reasons, the well will be completed at 4,442m, after which flow testing will begin. Roxi says it expects to start flow testing in the middle of the fourth quarter of 2014.

Roxi also had news regarding its new deep well, Airshagyl 6 (A6), which it also announced at the start of the month. A6 will have planned total depth of 4,700m, and will principally target the middle Carboniferous formation of the South Emba sub-basin from 4,390m.

The company said that it expects A6 will be spudded by the end of this year, and that, following a tender process, it will aim to enter into a fixed-price turn-key drilling contract with a Kazakh company. Given the experience gained from A5, Roxi says it will be using 450 tonne capacity rig, with greater operating range than the one used on A5.

Barring any fundamentally different drilling conditions, Roxi says that it expects the total depth A6 will be reached around four months from the spud date. The company says that it expects the results from A6 will help to determine the extent to which the oil-bearing interval discovered at A5 extends below 4,437m.

In addition to the deep well updates, Roxi said that it had been drilling several wells  in the South Yelemes portion of the BNG Contract Area, and that four of them (54, 805, 806 and 807) had been drilled to between 2,500 and 3,000m. All of them produced oil from the Valanginian and Jurassic and Roxi says it considers them to be commercially viable. It’s also drilled well 143, which is 5km from 806, and says that if it also tests positive in the Valanginian, then “the probability of significant quantities of recoverable oil would be much increased“.

Roxi also provided an update on its operations in the Galaz block, in the Kyzylorda Oblast in central Kazakhstan, in which it has a 34.44% interest.  It said that Well NK-31, which is targeting the Middle Jurassic on the main Contract Area, has now been drilled to 2,642m, and that core samples taken between 2,070m and 2,079m meters in the Karagansaisky horizon contain an interlayering of argillite and conglomerates.

There were also high gas shows at 2,283m, and preliminary analysis of samples from between 2,283m and 2,292m indicates the core consists of sandstone. Well NK-31 will now be tested to between 2,445m and 2,468m, with initial results expected by the end of this month. 

Despite this morning’s drop, Roxi Petroleum has gone up just over 200% so far this year, compared with a drop of 8.5% by the AIM All-Share index.

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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.