Asset Summary:

Oman Block 31 (50% Indago, 50% RAK Petroleum)
Jebel Hafit: estimated at 1 billion boe. Al-Jariyal-1 presently being drilled - originally due to complete in 160 days (9 July). Drill problems and raised costs announced 11 July. 21 Sept announced that drilling had reached 3600m (target depth 5900m) and was expected to penetrate the objective reservoirs towards the end of Q4 2007. Drilling problems and delays to cost additional $2M. 2D seismic results "encouraging". 28 Dec announced that drilling progressing slower than expected and costs increased to $25M for Indago alone. Now expected to hit target depth in Feb and test by end of April 2008. 4 Feb - Announced that well had reached 5131m, then encountered high-pressure, high-temperature salt water, disabling drill string. Assessing damage.

Oman Block 47 (50% Indago, 50% RAK Petroleum)
Hawamel-1: Estimated 61 million boe. Gas shows during drilling. Currently suspended pending horizontal wellbore testing (unlikely that standard testing procedures would achieve a commercial flowrate). New 2D seismic results "encouraging". Zad - 1 on the Adam prospect will be drilled after Al-Jariya with same rig. Evaluating seismic with a view to refining the prospect inventory.

Oman Block 43a (50% Indago, 50% RAK Petroleum)
Evaluating seismic with a view to refining the prospect inventory.

Cash
$54 million at 30 June 2007

After sale of many assets to RAK Petroleum, Indago is now an exploration company.


Click to enlarge work programme


Useful Links:
Indago Portfolio Overview
Sep 06 : Investor Presentation
Sep 06 : Interview with Peter Sadler, CEO of Indago Petroleum
27 Sep 06 : Interim Results RNS
8 Nov 06 : West Bukha-2 secondary target success RNS
21 Nov 06 : West Bukha-2 primary target success RNS
5 Jan 07 : Conclusion of West Bukha testing, Hawamel-1a exploration
10 Jan 07 : Oil Barrel Article - Indago Petroleum Enjoys Further Success On Block 8 Offshore The Sultanate Of Oman In The Middle East
Feb 07 : Al-Jariyal-1 spudded and "encouraging" seismic progress
13 Feb 07 : Oil Barrel Article - Indago Petroleum Goes For A High Impact Exploration Well Onshore The Sultanate Of Oman
Mar 07 : West Bukha info from Heritage Oil
7 Mar 07 : Potential Transaction RNS
11 Mar 07 : Oil Barrel - Little Fish In A Big Pond: AIM Juniors Finding Their Feet In The Middle East
14 Mar 07 : RNS - Disposal Of Assets (special dividend, share consolidation)
15 Mar 07 : Indago Presentation On RAK Petroleum Deal
1 May 07 : RNS - Indago response to rapid share price movement, plus drilling progress update
11 July 07 : RNS - Drill problems, $8.2 million cost increase and delays to reach target depth
21 Sept 07 : RNS - Interim Results
28 Dec 07 : RNS - Slow Progress And Increased Costs At Jebel Hafit
4 Feb 08 : RNS - Jebel Hafit update - Salt water encountered, drill string stuck

Well finally, PalPower at lease we know that they are not planning any P&A as yet and the target stays as before:)

I just don't understand reaction of sp....

The reaction is probably because the market didn't quite appreciate the potential for the last part of the RNS, namely insurance monies. Maybe most never read that far. Boots and Coots are not likely to have been cheap but the fact that they were on site when this problem happenned potentially gives the insurers an independent view of events and should make the settlement of a claim more speedy and easier in my view. Plus their costs since the incident should be recoverable too in any claim.

"we are intending to carry out surveys to ascertain the current status of the open section of hole and then formulate a plan to ensure that the problematic zone is isolated in the well."

"The source of the formation fluids which flowed to surface is uncertain."

"In order to drill deeper than the current level we will, at the least, have to abandon the existing section of open hole below 4591 metres and sidetrack from inside the existing casing."

"However it is likely that specialist equipment (expandable casing) will be required and that consideration, plus allowing time for over pressure to dissipate, may result in moving the rig and drilling the next exploration well before returning to complete operations at Al Jariya."

How could the market possibly interpret these comments as positive??? There is absolutely nothing in their RNS today to give shareholders better value for money, imo. The insurers are on site which merely means that the liablity question is going to be easier to sort out. In the short term the sp has done exactly what I would expect.

Quite simply everyone had written this off as P&A........and now its not.

And the Natih formation, target zone 1, appears to not even been drilled into yet.

Its looks very much like an isolated stringer in the Fiqa formation.

The very fact its not P&A and both targets are still in play, is very exciting imv, and good news.

Worth a read over at TMF :


http://boards.fool.co.uk/Message.asp?mid=10987945&sort=whole

Actually i know why sp moved like that, and I'm not surprised if some shares website and services are calling recent drilling update as "more troubles for Indago" . In fact drilling update doesn't say nothing new, cause nothing new happened

A few seem to have forgotten that IPL were asking for farm in bids to cover 100% of IPL's drilling costs for the second prospect (apparently to leave the existing funds free for acquiring further prospects). Seems a sensible move as far as de-risking goes. Those farm in offers were required by 31/3/08. So expect some comment when the interims come out next week.
As far as last week's RNS is concerned the existence of valid blow out insurance offers up all sorts of possibilities since that type of cover is generally for more than 100% of the cost to allow for the fact that re-drilling will probably be more costly. If there was a decision to P&A the hole (not convinced that that will be the decision from what has been said) then a % deal with the insurer would be a likely move. All of that means IPL either ends up with more cash in the bank or additional drilling funded by the insurer.
Not such a bad position to be in really!

Given results should be out soon, it will be interesting to hear news on the Block 47 farm out.

If IPL have managed to farm down their 50% to say 25% and got back costs and free carry on the drill through to testing completion, that will be nice. If they are pushing ahead with Zad-1, you would have to assume they must be close to farm out of it.

Everything has gone backwards but Zad-1 on the Adam prospect in block 47 was initially described as such in 2005 :


"ADAM

Adam is 40 km from the PDO Cambrian discovery at Kauther-1 which
flowed at 49 MMscfd/4,000 bpd.

This prospect is a Cambrian closure beneath small Cretaceous gas pool.
The reservoir target is Cambrian Amin sandstone formation at circa
4,200 m depth.

Indago expects to spud a US$ 11.4 m well, including testing, at Adam
in May 2006."

"Drilling and testing will take 4 months"

***********

This was the earlier news (and do not forget Izz (Hamawel-1) is also part of block 47 along with Adam (Zad-1). Hamawel-1 is still in play, pending a possible horizontal completion.

http://www.zawya.com/Story.cfm/sidZAWYA20080201084647/SecMain/pagHomepage/chnAll%20Regional%20News/obj2A17E941-F5E0-11D4-867D00D0B74A0D7C/

Indago opens block door

01 February 2008

is inviting companies to acquire an equity interest in Block 47 onshore Oman in exchange for funding 100% of its costs of a well on the Adam prospect.

The block is operated by RAK PetroleumRAK Petroleum, which is owned by the government of Ras al-Khaimah, one of the seven emirates making up the United Arab Emirates. Rak and IndagoIndago equally share the block where they have shot extensive 2D seismic.

There will be a data room available in London to allow potential investors to make a more detailed assessment of the opportunity.

The data room opened on 28 January, with offers invited by 15 March.

******************

http://www.menafn.com/qn_news_story_s.asp?StoryId=1093190723

RAK Petroleum Oman provides update on Block 31 progress

Khaleej Times - 29/03/2008

(MENAFN - Khaleej Times) RAK Petroleum Oman Limited, the wholly-owned subsidiary of RAK Petroleum PCL, yesterday provided an update on operations at the Al Jariya-1 well, located on the Jebel Hafit prospect in Block 31, adjacent to the border with Abu Dhabi.

RAK Petroleum is 'The Operator' of Block 31 holding 50 per cent, in partnership with Indago Petroleum Limited, which holds the other 50 per cent interest, the company said in a statement.

"Despite some serious complications in early February, which we believe resulted in an underground blowout, we are confident that we have not compromised the main target, Shuaiba reserves, and that the Natih reserves also remain prospective," commented Peter Sadler, CEO, RAK Petroleum. "We have been working closely with the Ministry of Oil and Gas, in Muscat, and our partners Indago to assess our options, which include executing a sidetrack."

Whilst exploring the causes of the high pressure water and gas release, the team examined rock cuttings from the formation encountered close to the bottom of the hole, to estimate approximate age. It was discovered that drilling has reached a limestone unit of Campanian age, which is some 7 million years younger than the first target 'the Natih formation' which is of Cenomanian age.

"This information clearly indicates that the Natih, which represents around 20 per cent of targeted reserves, still lies between 20m and 180m deeper than the furthest point currently reached," continued Sadler. "With the bulk of the targeted reserves lying a few hundred metres deeper in the Shuaiba formation, under the Nahr Umr shale, a regional seal."

RAK Petroleum is currently finalising plans based on these recent findings, in conjunction with the Ministry and Indago, and will provide an update once agreement is reached.

Results out.

http://www.investegate.co.uk/Article.aspx?id=200804100701000283S


We are off to Zad-1 in May, and will complete that and do the completion to AJ-1 by end Q4. All is looking fine, cash is ok through to 2009. A very positive statement, and AJ-1 will proceed, and even if the Natih formation is suspect, the main target area much lower (being 80% of the potential 1 billion boe) is still intact and very prospective :)

One must not miss the importance of the insurance for the AJ-1 drill....

"................Discussions are continuing but it appears likely
that at least a significant portion of the cost of the well control and
remediation will be covered by the joint venture's well control insurance."



Well control AND remediation.

One must not miss the importance of the insurance for the AJ-1 drill....

"................Discussions are continuing but it appears likely
that at least a significant portion of the cost of the well control and
remediation will be covered by the joint venture's well control insurance."



Well control AND remediation.

I hope it looks so good in reality ....

Blow-out insurance generally allows for more than 100% of costs of reinstatement (typically 125%) to reflect that it will likely cost more to get back to the same position. Other than delay, in some ways it would be good to come back to AJ-1 later since I think it is believed that the Zad-! prospect is more straightforward to drill (ie not into an underground mountain still in the formative stage!) and the target strata is at a shallower depth.

Seems sensible to await the outcome of the insurance claim before deciding to continue drilling.

Just playing with some figures for fun, they could well be wrong and so any suggestions welcome.



The companies cash position at 30th June 2007 was 54m US$. The companies cash position at 31st Dec 2007 was 41m US$.

Therefore the company overheads and drilling costs for 6 months of AJ-1 was 13m US$.

Thats a handy figure to know.

This works out to be therefore 2.16m US$ a month whilst drilling, so inflation etc.. lets say 2.5m for 2008.

Admin alone is circa 550K US$ a month in 2007 so lets say 600K US$ in 2008

Company was drilling only for 1 month in 2008 before blowout. All costs for blowout and also later remedial work coming from insurance.


Cash position :

1st Jan 2008 = 41,000,000 US$

Take off 1 months (Jan) admin while drilling = 38,500,000 US$

Take off 3 months (Feb/Mar/Apr) admin only = 36,700,000 US$

Take off 4 months (May/Jun/Jul/Aug) admin while drilling = 26,700,000 US$

Take off 2 months admin (Sep/Oct) = 25,500,000 US$

Take off 2 months admin while drilling = 20,500,000 US$

Take off 5m US $ as contingency for Zad-1 into production.

End of 2008 year should be circa 15.5m US$ cash balance with a producing asset coming on line (fingers crossed) - and hopefully, toes crossed as well, AJ-1 finished and the answer known as to whether there is a massive gas and condensate reservoir under Jebel Hafit.

Thats interesting figures PapalPower thanks

Indago Petroleum Ltd - Drilling update
RNS Number:2004T
Indago Petroleum Limited
28 April 2008


Indago Petroleum Limited
(AIM: IPL)


Drilling Update


Indago Petroleum Limited ('Indago' or 'the Company'), the oil and gas
exploration company exploring onshore the Sultanate of Oman, announces a
drilling update for the Al Jariya-1 well, located on the Jebel Hafit prospect in
Block 31, adjacent to the border with Abu Dhabi.


Following press releases made by the Company and by the Operator RAK Petroleum
PCL on March 28th 2008 regarding the status of the subject well, work has
continued on the attempt to remediate the well and prepare it for a possible
sidetrack. A cement plug was set across the open-hole section below 4591m as
planned. The operation proceeded using free-point logs which identified 2668m as
the point below which the drillstring was stuck. Subsequent recovery of drill
pipe could only be achieved from above this depth. This situation precludes any
sidetrack operation from below this 2668m level and a sidetrack from above this
level is considered to be neither safe nor technically feasible. Consequently,
there is no alternative other than to plug and abandon the Al Jariya well. This
operation has been approved by the Oman Ministry of Oil and Gas and should be
completed during the next few days.


Following consultation between the joint venture partners and the Ministry, and
in accordance with the previously announced plans, the intention is to now move
the Nabors 103 rig to the Zad location on the Adam prospect, on the adjacent
Block 47, and to drill that well starting in late May 2008. Whilst that well is
drilling, the joint venture will progress its insurance claim for the loss of
the Al Jariya well and fully evaluate the practicality and cost effectiveness of
re-drilling the Jebel Hafit prospect. It is likely that the order time required
for long lead items will preclude the possibility of drilling a new Jebel Hafit
well immediately following the Zad well and, therefore, such a re-drill would
probably not commence before 2009.


As described in the Operator's press release of March 28th 2008, technical work
indicates that the prospectivity of the Jebel Hafit structure remains
substantially undiminished, most certainly at the deeper Shuaiba (Thamama) level
which is estimated to hold the majority of the prospective resources.


David Bremner, CEO, commenting on today's announcement said:


'Clearly the loss of the Al Jariya well is a huge disappointment for the
company and our shareholders. We intend to pursue vigorously all avenues open to
us to get Jebel Hafit re-drilled in as short a time frame as possible. In the
meantime we believe that the imminent drilling of the Zad well on the Adam
prospect should hold considerable interest for our shareholders. Adam is a
moderate risk prospect targeting significant gas and gas condensate reserves in
close proximity to existing infrastructure. The target reservoir in the Zad well
is shallower than that in the Al Jariya well and, as the hole will be vertical
as opposed to deviated, our hope is that it will be drilled without significant
problems. The well is programmed to take around 100 days from time of spud.
Irrespective of the insurance claim and despite the cost overruns associated
with Al Jariya, Indago is well funded to drill Zad which is the final well in
the originally planned three well exploration programme.'


Indago holds an approximate 50% interest in Oman Blocks 31 and 47. The Operator,
RAK Petroleum PCL, holds the balance of the interest in each case.

Oh dear.