Melrose Successfully Tests Galata Pipeline

Melrose Resources announces the successful testing of the Galata Gas Field pipeline located in the Black Sea offshore Bulgaria. Following the repair of a faulty weld section, the pipeline has been successfully pressure tested up to the full operating pressure of the line.

We will now commence displacement of water in the offshore pipeline using the gas already in the onshore line. This is expected to take a further ten days, with first gas sales commencing at the beginning of June. Average daily production is expected to be 40 MMcfpd, with a peak of 53 MMcfpd in the winter.

Commenting on this, Robert Adair, Chairman, said:

'Completion of the Galata Gas Field development, which will represent a very significant source of cashflow to Melrose, is a major milestone for us as an international operating company. The platform has been designed with considerable flexibility to allow production capacity of up to 120MMcfpd to enable us to tie-in further discoveries and to convert the Galata Gas Field to a gas storage facility at a later date. We are now stepping up our exploration activities on Block 91-III and Block Kaliakra 99 where we have a number of drillable prospects which offer the potential to significantly enhance shareholder value.'

Melrose has a 100% working interest in the Galata Production Concession.

The Galata Gas Field has Proved reserves of 65 Bcf (62 Bcf net to Melrose) and Proved and Probable reserves of 90 Bcf (83 Bcf net to Melrose)

Daily production from the Galata Gas Field is expected to exceed 50 MMcfpd during the peak winter months. The gas will be sold under a take-or-pay' contract with Bulgargaz, the state owned gas distribution and supply company, for up to 14 Bcf per year.

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