Melrose Resources Receives 6-Yr Extension on El Mansoura

Melrose Resources reports that the Egyptian Parliament has confirmed a six-year extension to the El Mansoura Concession. The extension will be for two additional three-year exploration periods from the expiration date of the current exploration concession in June 2006. No further relinquishments from the existing Concession area of approximately 950 km(2) will be required.

The ECDC-1 rig has drilled two successful exploration wells during the first quarter of 2005. Both the Al Arab and Sinfas wells, located in the South Mansoura area encountered and tested gas in Pliocene intervals and have been completed as producing wells. The Al Arab well tested at approximately 4.5 MMcfpd on a 16/64 choke and 1,420 psi well head flowing pressure prior to being completed using a gravel pack. The Sinfas encountered two pay intervals and the lower interval was tested at 8.9 MMcfpd plus 67 bcpd on a 28/64 choke with 1,880 psi well head flowing pressure. Both wells await hook-up to the production facilities.

The ECDC-1 rig is now drilling the El Tamad well, targeting the Miocene Sidi Salim formation at around 8,000 ft. Success in the Sidi Salim formation could be important for the evaluation of larger and deeper prospects in this horizon.

Two step out wells have been drilled on the South Batra Field. The South Batra No.19 was drilled to the Miocene Abu Madi and successfully encountered the reservoir section. Mechanical difficulties curtailed testing of the well which was then sidetracked to a new up-dip location. The Abu Madi reservoir section encountered here was found to be very tight and did not flow on test. Three Pliocene intervals were perforated between 8,200 ft and 8,900 ft and were tested at non-commercial rates. The South Batra No.20 was drilled as a step out to the south of No.19 and the Abu Madi section was cored. Condensate was confirmed in the section above the field water contact but the reservoir again proved poor and the interval did not flow on test. Pliocene intervals tested gas at non-commercial rates. Differential compaction appears to have impaired porosity and permeability along a narrow structural high running north south through the middle of the channel system. The result of the South Batra No.20 has clarified the areal extent of the South Batra field towards the southeast. The results of the two wells have not had a material impact on booked reserves.

The SF-104 rig has side-tracked the South Batra No.15 well which was successfully tested in the Pliocene Mansouriya channel sand at a rate of over 20 MMcfpd. The sidetrack encountered 65 ft of excellent quality reservoir and the well will now be completed.

The EDC-9 drilling rig is currently drilling the South Batra No.17 well at a depth of 7,545 ft. The well is being drilled to test targets in both the Pliocene and Miocene reservoirs. The well has intersected the Pliocene target at 6,900 ft and encountered a reservoir interval of approximately 150 ft with high gas shows. The well will continue to a depth of 8,960 ft before logging the Pliocene interval and subsequently drilling into the Miocene target.

Commenting on this, Robert Adair, Chairman, said:

'We are extremely pleased to have received confirmation of the six-year extension of the El Manosura Concession. Melrose and its partner Merlon have committed significant resources to the exploration and fast-track development of the concession area. The large 3-D seismic acquisition program, the first onshore in the Nile Delta, has proven to be a very effective tool and has set the standard for exploration in the area. Recent drilling results have been mixed but we are now achieving consistent success on the shallow Pliocene exploration plays. The South Batra No.15 result has also confirmed the potential of the Pliocene channel reservoirs. The latest South Batra wells, after a good run of success, have demonstrated that channel systems do inevitably present some surprises. The South Batra No.19 encountered a good pay section initially and the No 20 location was an aggressive step-out to the south. The results do provide further important data and experience. We now look forward to drilling later on this year some of the larger prospects now being confirmed on the newly-processed 3-D seismic over the northern half of the concession.'

Melrose owns a 50% interest in the El Mansoura Concession and the South East El Mansoura Concession and a 46% interest in the Qantara Concession in Egypt.

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