Crown Oil & Gas Inc. ("Crown" or the "Company") (PINK SHEETS:CWOI.PK) would like to expand upon the earlier reported Operational Summary. Crown has determined that the most prospective area for development is the Krasnoarmeisky-2 Block. This is based on the Company's analysis and that of Saratovneftegeofizika, which carried out our seismic studies, as well as other Saratov experts.
Krasnoarmeisky-2 Block is located in the utmost north-west margin of the Precaspian Basin, a very significant oil producing area north of the Caspian Sea partly within Russia and partly within Kazakhstan. The subsurface of Krasnoarmeisky-2 has the major features of the Basin except for salt deposits. The Block is surrounded by several (over 10) of the region's major proven oil-producing fields, including the largest in the Saratov region, Lugovoye, discovered in 2009 by Petrom/OMV and located 15 km to the south. Lugovoye has recoverable reserves of 350 mln bbls (preliminary) and 3,000 bbl per day production (source: Russian oil industry's leading magazine ????? - ???????, ?3, 2010). All thicknesses that correspond to the region's major oil prospective intervals occur on Krasnoarmeisky-2 Block.
The development prospects for the Kikinso-Gusikhinsky and the Tereshkinsky Blocks are less clear. While Tereshkinsky has several oil producing fields nearby, the Company believes that it would be prudent to affect more seismic work to better delineate the two major prospects identified thus far. The regional setting of the Kikinsko-Gusinksky Block against producing fields is unclear and additional work would be advised, notably on the Osobaya prospect.
Acquiring new seismic data using advanced technology covering half of the Krasnoarmeisky-2 block would require an expenditure of US$1 million. Reprocessing existing data (350 KM) using the best industrial techniques (such as Multifocusing, which provided excellent results in many complex environments, including the Precaspian Basin) would require 2 months and US$90,000. Both operations could be carried out simultaneously.
Given budgetary constraints, the Company is concerned that it will not be in a position to complete the required exploration work, which would entail not meeting its current license obligations with possible loss of licenses. Seismic on Krasnoarmeisky-2 Block is to be carried out for June 2012, with drilling on the Block to begin by year end. The cost of drilling on Krasnoarmeisky-2 would be approximately US$5 million, with $2 million to be spent in 2012. Drilling as originally planned on the Tereshkinsky block would cost approximately US$4 million.
In order to meet its current obligations, the Company would require US$1.5 million. Should this be achieved, Crown would then be in a better position to defend fulfillment of its license obligation and to more clearly present the potential of its Krasnoarmeisky-2 Block.
Crown Oil and Gas Inc. is an independent oil and gas company focused on enhancing shareholder value by acquiring and developing oil and gas assets in Russia. Crown holds, through its subsidiaries, exploration and development licenses located in the Saratov region of Russia, one of the major oil and gas regions in the country with advanced infrastructure and more than 60 years history of oil and gas production. Saratov lies in the European part of Russia on the border with Kazakhstan, the largest producing country in Central Asia. Crown's licensed areas comprise approximately 2,000 km2.
Contacts:
Crown Oil & Gas Inc.
Kairat Sydykov, 832-922-2902
