Analyst Coverage & Research

Caspian Sunrise (CASP) – Corporate – Airshagyl Reserve Update

Market Cap £75.4m Share Price 3.35p (last close)

Caspian Sunrise announced on Friday (14 June 2024 at 10:42) that SciRes and independent Kazakh consultancy ascribed the immediate drainage area of the A5, A6 and A7 wells at the deep Airshagyl field with a combined best estimate success-case recoverable resource estimate of 49.0 million barrels of oil.

Caspian Sunrise (CASP) – Corporate – Deep Well 802 Strikes Oil – 30 January 2023

Market Cap £116.1m Share Price 5.16p (last close)
Caspian Sunrise announced that Deep Well 802 drilling the Deep Yelemes structure has struck oil unexpectedly (at 3,900m) above the targeted formation (expected at 4,300m). The well is now being sidetracked to a depth of 4,100m with a further 100m to be drilled to reach that depth. Caspian Sunrise has further announced that the well has flowed for three days at rates fluctuating from 700-900 b/d on an open hole basis.
The company indicated that once the well is completed (cased and perforated), they believe there is potential for the well to flow at a higher rate.
WHI View: Deep Well 802 has not yet been cased and it is drilling in a deep and over-pressured environment (beneath the Kungurian salt). We believe that the immediate priority of the company will be to drill the well to its targeted depth and then case the well, which involves cementing steel production tubing into the well. Thereafter, we would expect the company to test the well and to evaluate the unexpected oil discovery.

Operational Update – 25 May 2022

Market Cap £60.6m Share Price 2.90p (last close)
Caspian Sunrise announced that after a successful re-drill/workover of the Well 142 on the MJF structure, the well is producing at 1,400 bopd (with an 8mm choke). The company’s shallow assets, consisting of the MJF and the South Yelemes fields, are now producing 4,000 bopd, according to the company.
The company indicated that it continues to experience a discount on exported oil of $30-$35 per barrel (sent through the Russian pipeline network).
WHI View: Well 142 was a legacy well initially drilled in 2016, we can only be very impressed by material production increase that has been provided by re-drilling the well as a horizontal well. With shallow wells 141 and 151 lined up to be re-drilled next and with additional horizontal drilling planned for South Yelemes, the stage is set for material production increases from Caspian Sunrise. We reiterate out 21p fair value estimate for Caspian Sunrise and expect a positive market reaction to this news. For reference, 7.9p of our fair value estimate is premised on the company’s shallow assets.

Operational Update – 22 February 2022

21p WHI Fair Value Estimate

Having reported 2021 production of 1,462 barrels of oil per day, investors can expect significant production growth from Caspian Sunrise’s shallow oilfields, namely, the MJF and South Yelemes oilfields. Already, the company reported recent production (22 December 2022) of 2,300 barrels of oil per day – all from its shallow MJF field – after bringing its first two horizontal wells onstream. The company continues to advance well completion methodologies that are intended to unlock the world-class potential of its deep assets, namely, the Airshagyl and Deep Yelemes oilfields. Having emerged from a context of distress into a position of strength with a positive outlook, we ascribe a fair value estimate of 21p to Caspian Sunrise (see Table 1), from “Under Review”, of which 7.9p relates to the company’s shallow assets with the remainder relating to its deep assets. We estimate that the full success case value of the company’s assets amounts to 102p. We include 100% of the value of the company’s shallow assets and 10% of the value of the company’s deep assets in our fair value estimate.

MJF Structure: Caspian Sunrise completed its first horizontal well, Well 154, on 26 April 2021 – drilled into the MJF structure. On production, the well produced at a stable rate of 600 barrels of oil per day with higher peak production on short-term tests. The well essentially transformed the productive potential of the MJF structure by showing that horizontal wells can achieve production rates that are multiples higher than the production rates of standard, vertical wells. On 13 October 2021, the company completed its second horizontal well, Well 153, which produced at a commercial, stable rate of circa 830 barrels of oil per day. Both of the company’s horizontal wells continue to produce at stable rates near levels of 600 barrels of oil per day. We believe that horizontal wells have transformed Caspian Sunrise’s growth potential and financial outlook.

Airshagyl: Based on our volumetric assessment, we estimate that the company’s deep Airshagyl field would recover 305 million barrels of oil under a success-case. The field is both deep and significantly overpressured, which creates drilling challenges pursuant to which the field has yet to establish long-term stable oil flow – effectively the field has been produced at highly significant short-term rates from one deep well (2,000 barrels of oil per day). Like at the super-giant Tengiz field (9 billion barrels of recoverable oil) that is circa 40km away, the appraisal/testing period has been challenging. The company is hopeful that it will improve its well drilling/completion methodologies to allow the reservoir to produce at its full potential at stable rates. The company announced on 25 January 2022 that the recently drilled Deep Well A8 produced at a stable rate of 120 barrels of oil per day (from only one of three productive intervals) for several days – encouraging.