Spudded on November 10, the well is designed to further test the reservoir potential in the Mailisu III oil field, about 400m south of the recent discovery at the first well in the program.

Yesterday afternoon, Mailisu-III-2 was being drilled ahead at a depth of 1202m.

Caspian said the well has encountered oil shows over the Bed V-Bed VII interval, after which excellent gas shows were seen in at least three sandstone sections.

"The high gas readings necessitated raising the mud weight significantly to ensure continued safe drilling," the company said.

"The well will be drilled to total depth to evaluate the gas potential in the lower reservoir beds before logging."

The Mailisu gas field had produced 30 billion cubic feet of gas reserves before a landslide damaged local flowline infrastructure and subsequently stopped gas production.

A production history review indicates 1-5 billion cubic feet of remaining reserves which would require compression to be produced.

Under a farm-in agreement, Caspian has the rights to the shallow potential of some northern Fergana licences, while partner Santos focuses on the deeper potential.

As a result, the Ashvaz block is one of those northern licence areas where Caspian retains 100% rights to any oil down to 1000m.