UK: Nautical Petoleum*s Kraken Drilling Results Exceed Pre-drill Expectations

Nautical Petroleum announces the results of the Kraken appraisal well located on UK Central North Sea block 9/2b, in which Nautical has a 35 per cent. equity interest.

The 9/02b-4 well was drilled to a total depth of 4,502 feet Measured Depth (MD). The top of the target Heimdal III was encountered at 3,856 feet with a gross thickness of 160 feet. The well proved a substantially thicker and higher porosity main Heimdal Unit III reservoir than expected. Preliminary log evaluation indicates that the Heimdal III main sand contains 83 feet of net oil pay with an average porosity of 38.8 per cent and an average oil saturation of 87.2 per cent. No Oil Water Contact (OWC) was encountered in the Heimdal III main sand and thus the Kraken Field oil-down-to (ODT) has been extended to a depth of 3,934 feet TVDss (1,199m TVDss), from the level of 3,842 feet TVDss (1,171m TVDss) indicated in the 9/02b-2 well.

Upon completion of wireline logging, a 9.5/8″ casing string was run and a 50 feet interval was perforated. A test string consisting of sand screens and an electric submersible pump (ESP) was run and the well was production tested. The testing programme was specifically designed to recover uncontaminated reservoir fluid samples and to confirm the productivity of the reservoir tested in the discovery well, 9/02-1A. These objectives have been successfully met, although operational problems caused by the exceptional quality of the reservoir encountered meant that it was not possible to flow the well at a stable production rate.

The well was initially pumped at a restricted rate of 300 barrels per day. A productivity index of 2 bpd/psi was indicated during this flow period, confirming the excellent multi-Darcy quality of the reservoir. Subsequent to this flow period, the productivity declined markedly. An injectivity test was completed which showed an injectivity index of approximately 2 bpd/psi, indicating that the productivity decline was due to the plugging of the sand screens, rather than a reservoir or oil quality issue.

The well was thereafter produced at low rate in order to recover oil fluid samples which will be used for development studies. Preliminary analysis indicates an in-situ oil viscosity of c.100 centipoise, similar to that seen in the 9/02b-2 well.

The lower section of the well will now be abandoned and the 9/02b-4z exploration sidetrack drilled to a target west of the 9/02b-4 well. The sidetrack is expected to take approximately 14 days.

As previously announced, as a consequence of the decision by Nautical’s joint venture partner Canamens North Sea Energy Limited not to participate in the 9/02b-4 well, the participation in the 9/02b-4 well is Nautical 70 per cent and Celtic Oil Limited 30 per cent. Celtic Oil Limited have chosen not to partake in the 9/02b-4z exploration sidetrack and as such Nautical’s participation in this activity is 100 per cent.

Steve Jenkins, Nautical’s Chief Executive Officer, commented:

“This is an excellent result which has significantly exceeded our pre-drill expectations. The well has encountered significant net pay with excellent oil saturation and porosity, and has substantially increased the oil-down-to over Kraken. We will seek to establish the oil resources implications over the coming weeks.

Whilst operational issues curtailed the well test, we achieved the key objectives of obtaining reservoir fluid samples and of proving the productivity of the reservoir. The results of the well are a major step forward towards the development of Kraken.

We now look forward to drilling the 9/02b-4z exploration sidetrack which targets prospective resources of 114 mmbo (gross) west of the Kraken fault.”

Glossary:

API – American Petroleum Institute

bpd/psi – Barrels per day per pounds per square inch

mmbo – million barrels of oil

scf/stb – standard cubic feet per stock tank barrel

TVDss – Total Vertical Depth Subsea

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Source: Nautical Petroleum,September 22, 2010,