Investment Update
(Thomson Reuters ONE) - 6 November 2009AIM: XTR XTRACT ENERGY PLC ("Xtract" or the "Company") Investment Update - Extrem EnergyXtract Energy Plc ("Xtract") provides the following update onoperations in the Alasehir licence area at its Turkish joint ventureExtrem Energy A.S. ("Extrem Energy").Alasehir-1 Production TestAs announced on 21 September 2009, the Alasehir-1 well was re-enteredon 19 September with a view to testing production from five intervalsand, if successful, combining it with production planned from theSarikiz-2 well. On 5 November, Extrem Energy took the decision tosuspend further testing work on the well. Unfortunately, wellconditions encountered were worse than expected and several attemptsto repair the cement bonds were not successful. Some oil and waterwas produced from early attempts at production testing in two of thefive intervals, but poor well conditions meant that it was notpossible to determine with any confidence the actual composition ofthe reservoir fluids. Delay was encountered in awaiting specialisttools, but these did not in the end provide a solution.The failure of the production test is inconclusive as to the presenceor not of commercial oil at Alasehir as it was not possible toisolate the target intervals to test them. It is therefore notpossible to provide an estimate of the oil in place in the Alasehirpart of the field at this time. Extrem Energy will review alternativeapproaches for the exploration and appraisal of the Alasehir part ofthe field in light of this development.In view of the difficulties faced at Alasehir-1, Extrem Energy hasdecided to next drill a new well Sarikiz-3 on the Sarikiz part of thefield rather than carry out the previously announced re-entry of EastSarikiz-1. This will enable the drilling rig to catch up time lost atAlasehir-1. If it is decided to re-enter East Sarikiz-1 at a laterdate, a cheaper work-over rig may be used. An update on plans forSarikiz-3 will be provided as soon as possible.Sarikiz-2 ProductionOn a brighter note, preparation for commercial production fromSarikiz-2 has advanced considerably since the last update on 27August 2009. Separation and storage facilities required at the wellsite are in place and discussions with the Tupras refinery at Izmirhave confirmed their willingness and ability to buy the crude oilproduced. The necessary government permits for extended testproduction have been applied for and are expected to be in place toenable production to commence in the second half of November.Although the commencement of production is a little later thanoriginally expected, its start will nevertheless mark an importantmilestone for Extrem Energy.Alasehir/Sarikiz Field DevelopmentIn order to help inform decision-making by Xtract in relation to theAlasehir concession, Xtract commissioned a recognised independentexpert firm to make an initial evaluation of work to date on theAlasehir concession area. The work was conducted during October 2009and included site visits to Alasehir, data review and discussionswith partner Merty Energy.In their report, the independent experts acknowledged that Sarikiz-2represents an interesting new discovery and that the well has proventhe presence of an active petroleum system in the basin whilstcautioning that much remains to be done to determine the extent ofthe fields and therefore before long-term commercial projections canbe made. On the basis of the data supplied by Extrem Energy duringthe visit of the experts, the experts estimated the P50 prospectiveresources to be 96mbbl oil in place in the Sarikiz field and applieda recovery factor of 14% resulting in a corresponding 13mbbl estimatefor recoverable oil. These estimates are significantly lower thanExtrem Energy's previously published estimates of P50 oil in place of371mbbl and recoverable oil of 74mbbl based on a recovery factor of20%. In addition to the different recovery factors, the principalreasons for the differences lie in the assumptions made in relationto: (i) mean thickness of oil bearing areas (Extrem Energy - 50m;Expert - 25m); and (ii) the mean area of the oil bearing field(Extrem Energy - 13km2; Expert - 10km2). Following a review of theexpert's report, Extrem Energy has confirmed its own previouslypublished estimates and it should be noted that until furtherexploration and appraisal is conducted within the concession area,any volumetric estimates of oil in place are subject to a high degreeof uncertainty. The assessments provided by both Extrem Energy andthe independent expert are based on a geological model arising fromseismic and geochemical analysis that has not yet been validated (orinvalidated) by drilling data.The scope of work required of the expert did not amount to a fullyfledged "Competent Persons Report". It is intended that such a reportincluding the applicable resources categories and estimates will beprepared in early 2010, once production is established.In the opinion of the independent experts, Xtract has an interestingand capable partner in Merty Energy, but Xtract needs to play itsfull role as a non-operating partner to ensure success. Steps arealready being taken to strengthen operating procedures and to startto build an independent management team at Extrem Energy.Further updates will be provided as appropriate.The information above relating to resource estimates has beenprovided using the SPE standards and includes the following terms:"mbbl" (million barrels); "P50" (midcase scenario in relation toreserve expectations.The above information has been reviewed and approved by OngunYoldemir, Managing Director of Extrem Energy, who has a mastersdegree in geological engineering and worked as an explorationist inthe oil and gas sector in the Middle East, Kazakhstan, Azerbaijan,and North Sea, has over 28 years' experience in the resource andenergy sector and is a member of the American Association ofPetroleum Geologists, European Association of Geologists andEngineers, the Society of Exploration Geophysicists and severalrelated Turkish institutions.Enquiries please contact:Xtract Energy Andy Morrison, CEO +44 (0)20 3205 1148Smith & Williamson David Jones +44 (0)20 7131 4000Corporate Finance Azhic Basirov Barrie NewtonAbout Xtract EnergyXtract identifies and invests in a diversified portfolio of earlystage energy sector technologies and businesses with significantgrowth potential. The Company aims to work closely with theassociated management teams to achieve critical project milestones,to finance later development stages, and to build and crystallisevalue for all shareholders and partners.For further information on Xtract please visit www.xtractenergy.co.ukA short description of the principal assets of Xtract is set outbelow. These assets are either held directly or through wholly ownedsubsidiaries of the Company.Extrem Energy AS ("Extrem Energy")Extrem Energy is an exploration and production joint venture withMerty Energy of Turkey. The JV's aim is to create a new medium-sizedoil and gas exploration and production business, initially focused onTurkey where Merty Energy has particular experience and expertise.Extrem Energy has a portfolio of licence interests including the highpotential prospect at Candarli Bay in south-west Turkey. Xtract owns34% of the issued share capital of Extrem Energy.Elko Energy Inc. ("Elko")Elko is a Canadian registered oil & gas exploration company which hasinterests in exploration and production licences in the Danish andDutch North Sea. Its major asset is in the Danish North Sea; an 80%interest on 26 offshore blocks in a 5,400 sq km exploration andproduction licence close to the prolific Central Graben oil field.Technical work indicates the potential for significant reserves. Elkoalso holds a 60% operating interest in gas-bearing license blocks P1and P2 in the Dutch North Sea. Xtract owns approximately 36.8% ofElko's issued share capital.Zhibek Resources Ltd ("Zhibek Resources")Zhibek Resources is an oil and gas exploration and production companywhich has a 72% interest in the Tash Kumyr and Pishkoran explorationlicences in the Kyrgyz Republic. Xtract has entered a farm-outagreement to fund a seismic and drilling programme for 2008-09.Xtract owns 25.0% of the issued share capital of Zhibek Resources.Xtract Oil Ltd ("XOL")Xtract's wholly owned subsidiary, XOL, is focused on the developmentof the Company's oil shale resources in Australia and the technologyfor oil extraction from oil shale resources. Xtract has oil shaleexploration rights over mining tenements in the Julia Creek area ofQueensland. In addition to evaluating third party technologies, XOLhas been developing proprietary technology for the commercialextraction of liquid hydrocarbon products from oil shale.Xtract Energy (Oil Shale) Morocco SA ("XOSM")XOSM is a joint venture with Alraed Limited Investment HoldingCompany WLL, a company controlled by His Highness, Prince Bandar BinMohd. Bin Abdulrahman Al-Saud of Saudi Arabia. XOSM has signed aMemorandum of Understanding with the Office National desHydrocarbures et des Mines for the purposes of evaluation andpossible development of an oil shale deposit near Tarfaya, in thesouth west part of Morocco. Xtract currently holds 70% of the jointventure.---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 06.11.2009 - 13:52 Uhr
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