Max Petroleum to Begin Drilling in Block E in July

Max Petroleum to Begin Drilling in Block E in July

Max Petroleum says that the shallow well drilling program in the Block E license area, western Kazakhstan, is expected to commence in July. The company expects to achieve initial production in August 2006.

As announced earlier this year, the first four shallow drilling targets have been identified in Block E at depths of 300 to 900 meters. The cost of these shallow wells is estimated to be US $700,000 per well, with the cost of surface production facilities being an estimated US $350,000 per well. Completion equipment for these and additional shallow wells are on schedule for delivery by the end of June. Temporary production facilities and accommodation are under construction and will be available to be on site by July.

Several other shallow drilling locations have been identified and are currently being prioritized with a total of 10 wells to be drilled in the shallow zones during 2006. The location of the wells will also be dependent on the size of each shallow structure, based on initial drilling results, since multiple wells may need to be drilled in the same shallow structures before moving on to subsequent targets.

Based on progress in Max Petroleum’s Shallow Drilling Program in 2006 the company has the sole option to extend the contract for the shallow drilling rig into 2007. Should the program proceed as expected, Max Petroleum aims to drill a further 25 shallow wells in 2007.

New Prospects and Seismic Program Update

The 2006 seismic program is currently in progress and includes a 2D and 3D survey in Block E. The main elements of this program are as follows:

* The 2D lines are expected to be completed in June 2006 and will be used to assist in identifying further leads in new areas within Block E. * The 250 square kilometer 3D survey is located over an unexplored cluster of possible shallow to intermediate traps in Block E and is expected to be completed in July 2006. * It is likely that the 3D seismic program will be extended and expanded due to encouraging initial results. To date, the seismic processing has shown a number of potentially interesting leads in the salt flanks that were not drilled in Soviet times.

* Further evaluation of these intermediate leads (typically 1,000 to 3,000 meters) is currently in progress and the Company will provide a further update on this new area of exploration as soon as the appropriate review has been carried out by McDaniel & Associates.

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