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Oryx Petroleum Operation Updates In Kurdistan During Second Quarter

The following operational updates were announced during Oryx Petroleum second quarter financial results

Selected Operational Highlights

Kurdistan Region of Iraq

Production and Sales

Gross (100%) oil production from the Hawler license area averaged 3,800 bbl/d for the three months ended June 30, 2015 and 3,900 bbl/d for the month of July 2015. Production levels were constrained by the Corporation during the quarter to manage and assess the well performance of individual wells and determine maximum efficient rates for each.
In mid-March 2015, Oryx Petroleum commenced selling its oil to a third party regional marketer. Under this crude sales agreement, payments are made by the regional marketer directly to Oryx Petroleum, with realised sales prices referenced to a Dated Brent crude oil price and adjusted to reflect transportation costs and crude quality. Liftings by the regional marketer have been largely uninterrupted since commencement. The Corporation received its first and second payments in May 2015 and July 2015, respectively, for its share of proceeds from the first and second shipment cycles under this agreement. During the first cycle, 221,000 barrels of gross (100%) oil were lifted at a realised sales price of $35.41/bbl. During the second cycle, 258,000 barrels of gross (100%) oil were lifted at a realised sales price of $29.99/bbl.
Productive Capacity

Six wells, the Demir Dagh-2 ("DD-2"), Demir Dagh-3 ("DD-3"), Demir Dagh-4 ("DD-4"), Demir Dagh-6 ("DD-6"), Demir Dagh-7 ("DD-7") and Demir Dagh-10 ("DD-10") wells, are completed and tied into the Hawler Production Facilities. All six wells are capable of production with DD-6 the most recent well to be brought on production. The process of determining maximum efficient production rates is continuing but such rates are likely to be considerably lower than previously estimated. Well assessment has been protracted by the limitations of the temporary facilities that have to date been used to gather and process Demir Dagh production, which do not readily allow for discrete measurement of each individual well's performance. The imminent commissioning of the first phase of the Hawler Production Facilities will bring additional water handling capacity which is expected to support the CorporationĀ“s efforts to determine maximum efficient production rates for existing and future wells.
Appraisal / Development Drilling

During the second quarter drilling activity was limited and consisted primarily of completion testing concluded on the DD-7 well. No rigs are currently under contract in the Hawler license area. Operational focus during the quarter was the assessment and optimization of the wells drilled to date at the Demir Dagh field. The Corporation is planning to resume drilling activity in the second half of 2015 in the Hawler license area in order to increase productive capacity. Oryx Petroleum plans on drilling or re-completing up to three development wells at the Demir Dagh field before year end 2015. Estimated production rates per well are expected to be lower than previously estimated while costs and drilling times are expected to be lower and shorter, respectively, than previous wells drilled. The lower costs and shorter drilling times reflect a re-design of future wells incorporating the CorporationĀ“s experience from existing wells and a reduced need for appraisal related activities.
Processing and interpretation of 3D and 3C seismic data acquired in late 2014 covering the Demir Dagh field and the portion of the Banan field east of the Zab river continues. Analysis of the 3D and 3C seismic data is expected to improve the efficiency and effectiveness of future development drilling.
Facilities and Export Sales Infrastructure

Construction of the first phase of the Hawler Production Facilities, with gross (100%) nameplate processing capacity of 40,000 bbl/d, is in the final stages of commissioning which is expected to be completed in the coming weeks. The Corporation expects to terminate the lease of the current 20,000 bbl/d temporary production facility in the coming months.
The installation of a 1.2 kilometre 16" connecting line from the Hawler Production Facilities to the 36" KRI-Turkey export pipeline is complete. Final commissioning will be completed when production volumes and export payment dynamics justify export by pipeline.
2015 Estimated Production Exit Rate

Gross (100%) oil production 2015 exit rate from the Hawler license area is now estimated to be between 8,000 to 10,000 bbl/d reflecting production from existing producing wells and additional wells expected to be drilled or re-completed and online before year end.

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