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Kazakhstan experienced extremely cold, subzero temperatures during that first quarter of 2006 that hampered our drilling operations, workover program and production of crude oil. During the first quarter of 2006 we spudded two wells, the SA-11 and the SA-12, in January and February, respectively. The SA-11 reached target depth in late April and the SA-12 reached target depth in early May. Both wells are currently awaiting completion and we expect to place them on production in late May. We have resumed our workover program and are currently deploying a newly contracted completion/workover rig. In April 2006, we signed contracts for three additional drilling rigs and the completion/workover rig for the accelerated development of the Field. The first drilling rig is expected to arrive in mid-May and the other two drilling rigs in June and August, respectively.
Production from existing wells has been constrained by the lack of a central production facility. We engaged a leading international engineering company in February 2006 to inspect and submit a plan to complete the production facilities. This has been accomplished, and construction work on the production facility has resumed. We anticipate the facility will be commissioned by the fourth quarter. We have also taken steps to de-bottleneck the temporary facilities to allow for increased production in the interim.
Revenue, net (in thousands)
§ $ 2,842 $ 1,154
Number of barrels sold
§ 99,491 68,525
Average price per barrel
§ $ 30.05 $ 17.25
Production (barrels)
§ 103,848 74,102
Average daily production (barrels)
§ 1,154 823
Revenue for the three months ended March 31, 2006 increased $1.7 million over the comparable period of 2005 due to the combination of increased sales volume and average sales price per barrel. Beginning in August 2005 we were able to sell oil in the export market in addition to the local domestic market, thus recognizing a higher average price. In the first quarter of 2006, approximately 47% of our sales, or 46,341 barrels (“Bbl”), were in the export market at an average price of $40.57 per Bbl, while 53% of sales were in the local domestic market at an average price of $20.88 per Bbl. The last price we received in March 2006 was $42.06 per Bbl. The higher volumes sold and produced were driven by the increase in the average number of producing wells in the first quarter of 2006 as compared to the same period of 2005.
Average number of producing wells
§ 5.24 2.48
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