Groundstar, Vast, Slump on Qara Dagh Update

Shares in Groundstar Resources closed down 29% on Monday, with Vast Exploration down 54%, following their report of unsteady output at the Qara Dagh - 1 exploration well in Kurdistan, Iraq.

Drilling of the Qara Dagh - 1 well has reached a total depth of 3,908 meters, has been log evaluated and, as previously reported, the well has been cased to 3,558 meters with a 7 inch casing string. The following intervals have been evaluated and are summarized as follows:

Open Hole Interval - Shiranish Formation

The open hole interval from 3,558 meters to 3,908 meters was acidized and flowed light oil confirming an active hydrocarbon column. Oil flowed from the interval achieving a maximum production rate spike of 550 barrels of 48 API oil per day and 800 mscf/d of gas with no H2S. Although no economic stabilized rates were achieved we are extremely encouraged that an active oil column has been confirmed in the upper Shiranish.

From the data interpretation, and the significant spike in observed well bore pressures before the drilling was stopped, it is believed that the well has potentially entered into the first 10 meters of the next reservoir, the Cretaceous-aged Kometan formation, which is one of the primary target zones previously identified. It is important to note that the Kometan formation is regionally known to be a naturally fractured reservoir that has produced significant quantities of oil.

Shiranish / Tanjero Interval

Certain sections of the Shiranish/Tanjero cased interval were perforated and acidized. The well flowed light oil. The interval flowed intermittently at rates of up to 400 barrels per day with APIs varying from 42 to 47 based on field measurements that confirms a second active hydrocarbon system with no H2S.

Current Status and Go-Forward Plan

Currently the shallower Aliji formation is being tested. The Aliji formation consists of thick sequences of turbidite sands and argillaceous shales with average effective porosity of 16.7% and maximum porosity of 27%. While drilling this section in July 2010, it was reported that an increase in fluorescence, gas readings and free light oil in the mud system was detected.

The partner group is having further discussions to consider the possibility to deepen the well an additional 200 to 250 meters subsequent to the completion of the current testing program. The primary purpose would be to drill deeper to further evaluate the production potential of the prolific Kometan formation, the zone immediately below the Shiranish formation. Confirmation of the possibility and technical capability of deepening the well after testing is expected over the next month.

The Qara Dagh Block is located 60 kilometres southeast of the Taq Taq oilfield and 60 kilometres east of the giant Kirkuk oilfield. Groundstar has a 6% beneficial interest in the Qara Dagh Block, with Vast Exploration holding 37%.

(Sources: Groundstar, Reuters, Yahoo)


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