Lundin finds oil on Lagansky block in Caspian Sea

Eric Watkins
Senior Correspondent

LOS ANGELES, July 4 -- Lundin Petroleum AB said its Morskaya-1 exploration well, which was drilled on Lagansky block in the northern Caspian Sea, has encountered a major oil accumulation in the Aptian and Neocomian sandstone reservoirs, with minor amounts of natural gas encountered in the overlying Albian reservoir.

Calling the discovery a "major milestone" for the company, Lundin President and Chief Executive Officer Ashley Heppenstall said Morskaya-1 "will have a material impact" on the company. "We look forward to our forthcoming exploration and appraisal program to further realize the excellent potential of this area," Heppenstall said.

Morskaya-1 has been drilled to a depth of 2,082 m in less than 2 m of water. A significant amount of cores, wireline logs and reservoir fluid samples have been acquired. Lundin said that the forward program this month involves the testing of at least two of the hydrocarbon bearing reservoirs.

The Morskaya structure straddles the license boundary of Lagansky block and the adjoining acreage controlled by the Caspian Oil Consortium and is on trend with several major oil and gas discoveries made by OAO Lukoil in the Russian sector of the Caspian Sea.

Lundin said Lagansky block contains significant additional prospectivity and following the testing of the Morskaya-1 well the Marine Drilling Complex (MDC) will be transported to the Laganskaya-1 well location, where drilling is expected to commence at the end of September.

Lundin plans to drill another two wells in 2009. Petrovskaya-1 will be targeting a large anticline to the northwest and on trend with the Morskaya discovery. The second well will most likely be an appraisal well of the Morskaya discovery.

Lundin has a 70% stake in Lagansky block. In July 2007, OAO Gazprom signed a call option agreement with Lundin to acquire a 50% stake plus one share in the block.

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