AAK Arawak

    RNS Number : 0644G
  Arawak Energy Limited
  16 October 2008
   



    Arawak ENERGY LIMITEd
    Whiteley Chambers, Don Street, St. Helier, Jersey JE4 9WG

    LSE & TSX TRADING SYMBOL: AAK

    16 October 2008

    FOR IMMEDIATE RELEASE

    ARAWAK OPERATIONAL UPDATE: PRODUCTION RISES AS KAZAKHSTAN DRILLING GETS UNDERWAY

    Arawak Energy Limited ("Arawak or the "Company") announces that the Company's net production has risen to approximately 12,750 barrels
of oil per day ("bopd") following a rise in produced volumes at the Akzhar and Besbolek fields in Kazakhstan.

    Production at the Company's two main producing assets in Kazakhstan had been constrained in previous months while we sought regulatory
approval for the transition of the contracts from the exploration phase to the production stage. Arawak announced on 25 September 2008 that
the government regulatory authority in Kazakhstan, the Central Committee for Development, had approved the technical plans of  development
for both fields, allowing us to immediately begin work on the development phases.

    The Company embarked on a re-entry programme to rejuvenate shut-in production, which has already resulted in an increase in flow rates
at both Akzhar and Besbolek. Concurrently, four rigs were mobilised to pursue an aggressive ten-well development drilling programme at each
field for the remainder of the year. All four rigs have already commenced drilling at Akzhar and Besbolek.

    Alastair McBain, Arawak's President and Chief Executive Officer, commented: "In just a few weeks after receiving the approvals we have
seen an improvement in our production rates and we expect this to continue at a steady pace until the end of the year. The speed at which we
were able to mobilise the drilling rigs and the rig crews is a testament to the planning, preparation and execution skills of our staff in
Kazakhstan."

    Kazakhstan
    The Company has been successful in its application for the cancellation of the export customs duty applied to its Akzhar contract and we
are currently awaiting confirmation on the amounts and process of reimbursement. Exports from the Besbolek field will continue to be subject
to export customs  duty. As announced by the government of Kazakstan in September, the export customs duty increased to $203.8 per tonne
from $109.9 per tonne effective 11 October. Besbolek accounts for 23% of Arawak's current net production in Kazakhstan. 
        
    In other operations, production at the 40% owned Saigak field was steady at 1,180 bopd net to Arawak. 

    In the East Zharkamys III exploration block, the Utubai 1 well encountered 40 metres of prospective gas pay in the Barremian formation
at a depth of 342 metres. Casing has been set for future resource testing. Two wells drilled earlier this year were plugged and abandoned
with no significant hydrocarbons detected. In total, five wells are scheduled for drilling on the East Zharkamys III block in 2008 as
required under the work commitment programme prior to our plans to acquire seismic data. A seismic crew has now been mobilised to the area
and has commenced pilot testing for a 530 km 2D seismic programme scheduled in the second half of October.

    At the recently acquired Tamdykol exploration block, the Company is finalising the programme for a 220 km 2D seismic survey in the
fourth quarter. At the Alimbai producing block, processing of the seismic data from the 27 sq km 3D and 200 km 2D programme undertaken in
the second quarter is scheduled to be completed by the end of October.

    Russia
    In the North Irael block, offset well 641, which commenced drilling in the second quarter, encountered oil at a deeper horizon than
previously discovered. This has confirmed a lower oil/water contact and is therefore expected to add additional reserves to the field as
well as proving up oil in the expected productive horizon. The well, which is offset to exploration well 64, is producing approximately 250
bopd of natural flow from the new horizon. Presently we are drilling well 642, the second delineation test in the pool. 

    In the Sotchemyu-Talyu area, drilling is continuing at the 128 development well, which tested oil on drill stem test in the upper F2
interval, a shallow Devonian horizon above the original target Fo interval. The Company has drilled and completed eight wells in
Sotchemyu-Talyu so far in 2008 with seven considered commercial successes and one awaiting workover activities. Work is expected to start in
the fourth quarter on an inter-field pipeline to tie North Irael production into the central processing facilities at Sotchemyu-Talyu.

    At the Company's two other contract areas in Russia, a seismic crew has been mobilised to the South Sotchemyu appraisal block in
preparation for a 115 km 2D seismic acquisition programme in the fourth quarter. A 40 sq km 3D seismic programme was completed at South
Sotchemyu earlier this year. In addition, a 100 km 2D survey is scheduled in the coming winter months at the Kymbozhyuskaya exploration
block ahead of drilling of exploration well 11 in February 2009.   


    For further information please contact:

    Arawak Energy Limited                                                                                   Tel: +44 (0) 20 7973 4285
    Tanya Pang, Head of Investor Relations                                                              Fax: +44 (0) 20 7824 8466
    E-mail:    info@arawakenergy.com                                                                Web: www.arawakenergy.com

    Brunswick Group LLP                                                                                       Tel: +44 (0)20 7404 5959
    Patrick Handley    

    JPMorgan Cazenove Limited                                                                            Tel: +44 (0)20 7588 2828
    Steve Baldwin            
    Neil Haycock

    Oriel Securities Limited                                                                                    Tel: +44 (0)20 7710 7600
    Richard Crawley 
    Natalie Fortescue


    Notes to editors

    Arawak's Common Shares are listed for trading on both the TSX and the LSE under the symbol "AAK". The Company is engaged in the
exploration, development and production of oil and natural gas in Kazakhstan,  Russia and Azerbaijan. In Kazakhstan, the Company holds five
producing fields and two exploration blocks. The Company has a 40% participating interest in the Saigak producing block acquired in June
2008. The remaining assets are held through its 100% wholly-owned subsidiary Altius Energy Corporation ("Altius"). Altius' main producing
field is Akzhar with smaller fields at Besbolek, Karataikyz and Alimbai. The two exploration blocks East Zharkamys III and Tamdykol are also
situated in western Kazakhstan. Arawak's producing assets in Russia are held through ZAO PechoraNefteGas ("PNG") and LLC NK Recher-Komi
("Recher-Komi"), in which Arawak has a 50% interest with the remaining interest being held by Lundin Petroleum AB. Also in Russia, Arawak
holds a 100% interest in the Kymbozhyuskaya exploration block and in the South Sotchemyu appraisal block. In Azerbaijan, the Company's asset is its interest in the Exploration Development and
Production Sharing Agreement ("EDPSA") for the South West Gobustan oil and gas fields. CGL, a company registered in Anguilla, British West
Indies, in which the Company has a 37.17% interest, holds an 80% interest in the EDPSA with the remaining 20% held by an affiliate of SOCAR.
The remaining 62.83% share in CGL is held by two affiliates of the project operator, CNPC.

    This announcement includes "forward-looking statements", including statements with respect to Arawak's anticipated exploration and
development activities which are based on the opinions and estimates of management at the date the statements are made, and are subject to a
variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in
the forward-looking statements. These risks and uncertainties include, but are not limited to, risks associated with the oil and gas
industry (including operational risks in development, exploration and production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation
to production, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate
fluctuations, the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international activity. Although Arawak believes that its
expectations represented by these forward-looking statements are reasonable, there can be no assurance that such expectations will prove to
be correct. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in the Company's
securities should not place undue reliance on these forward-looking statements. For a detailed description of the risks and uncertainties
facing Arawak, readers should refer to Arawak's Annual Information Form for the year ended 31 December, 2007 and dated 31 March, 2008 as
filed at www.sedar.com.



This information is provided by RNS
The company news service from the London Stock Exchange
 
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