Gas2Grid Suspends Work at Malolos-1 Well in Malolos Oil Field in SC44

Gas2Grid Limited revealed Tuesday that the production testing at Malolos-1 well in Malolos oil field in Service Contract (SC) 44 in Cebu, the Philippines has to date gathered sufficient data to support an application to the Philippine Department of Energy (DOE) to allow the Company to continue work under SC 44 to establish an appropriate completion technology for sustained production and full appraisal and development of the oil field.

Over the past few weeks, the lower and the upper oil bearing sandstones were successfully tested separately. The upper sandstone continued to produce oil individually although no significant improvement in oil production rate was recorded. The lower sandstone recorded a significant increase in production rates at an equivalent of over 100 barrels of oil per day although it was also associated with a significant increase in water production indicating proximity to the oil-water contact.

The Malolos-1 well has demonstrated that it can produce oil at commercial rates. On several occasions the well has previously produced the equivalent of 200 barrels of oil per day over short periods. Oil flow has been impaired when the perforations within the wellbore at the sandstone reservoirs become blocked with formation fines.

The well testing has determined that the two objective sandstones are oil bearing, established an oilwater contact for the lower oil sandstone indicating a minimum 1,640 foot (500 meter) vertical oil accumulation (when correlated with the oil sands in Malolos-4) and established that oil production rates are impeded by fines migration and sand production.

Malolos-1 is suspended while the Company applies to the DOE, under the terms of SC 44, for a further period of work in order to determine an appropriate completion technology to be applied to well completions during field appraisal and development. Seismic acquisition is also planned to locate appraisal well sites.

The newly gathered additional technical data will assist in encouraging a farminee to fund field appraisal and development.

Dennis Morton (managing director) made the following comments:

“We are encouraged by the well test data and oil production which when combined with all available technical data supports the previous determination that the Malolos Oil Field has a “Best Estimate” (2C) of 20.4 million barrels “Contingent Resource” of oil in place and a “Low Estimate” (1C) of 6.8 million barrels with a “High Estimate” (3C) of 68.1 million barrels. This is a resource well worth pursuing.”


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