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Mukhaizna Overview

On September 1, 2005, Occidental Mukhaizna, L.L.C. assumed operation of the 105km2 Mukhaizna Field in Oman's south central interior. A new Production Sharing Agreement for the Mukhaizna Field (Block 53) was signed in July 2005 by the Government of the Sultanate of Oman, and on September 1, 2005 Oxy Oman assumed operatorship of the block.

The field was discovered in 1975 and is estimated to hold more than 2,100 MMbbls of 15-16° API oil. Despite the significance of the discovery, the low gravity oil made development uneconomical until pilot tests with horizontal wells led to cold production in 2000 by the former operator. Production difficulties resulted in a decline from 15,000 barrels of oil per day (BOPD) to the current level of 9,000 BOPD from 80 producing wells at the end of 2004.

Oxy Oman plans to use horizontal well steamflood technology to increase production to 150,000 BOPD by 2012, developing about 800 thermal patterns of 25 acre spacing. Initial production from steamflood is expected to exceed 50,000 BOPD by as early as 2008 with an anticipated 30-year project life.

Oxy Oman's plan also includes a central production facility design that includes primary separation, oil treatment and gas treating systems. Production capacity is anticipated to be 150,000 BOPD, 600,000 barrels of produced water per day (BWPD) and five mmscf per day of gas.

Successful development of the Mukhaizna Field will significantly add to Oman's producing capacity and help reverse a declining oil production trend. The Mukhaizna development will also contribute to an increase in the skilled and technical Omani labor force for the hydrocarbon industry.

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