Petroceltic Awarded Shallow Water License Offshore Italy

Petroceltic International has been awarded Italian License B.R. 268 VG (formerly named BR.G.490) in the Adriatic Sea. The License covers 127 square kilometers in shallow water immediately adjacent to two onshore oil discoveries named Miglianico 1 and 2. The application for B.R. 268 VG was filed before the Miglianico discoveries were made.

The License area contains an existing oil discovery named ELSA 1, which was drilled in the early 1990s. A previous License holder (Enterprise Oil) estimated that this discovery could yield probable (P50) oil reserves in excess of 108 million barrels (mmbbls). Consequent to this discovery, Agip, the Italian oil major, drilled the nearby successful onshore Miglianico 1 and 2 wells which are now producing oil from the same oil reservoir that was encountered in ELSA 1. Miglianico 1 is only 800 meters to the South West of the B.R. 268 VG License boundary.

An independent report commissioned by Petroceltic's partner Rigo Oil Company Limited (Rigo), undertaken by Petrel Roberston Consulting Ltd of Calgary concluded that there could be probable (P50) reserves of 182 mmbbls in the License area with possible reserves (P10) of some 567mmbbls.

Under an agreement with Rigo dated June 29, 2004, Petroceltic has an initial 15% interest in the License with an option to increase to 40%. In addition Petroceltic holds pre-emption rights over further interests. Rigo Oil Company Limited is an independent oil and gas company with interests in Italy and Tunisia.

Now that the License has been awarded, Petroceltic and Rigo will purchase and interpret more existing seismic data including that already acquired by AGIP, and accelerate drilling plans.

John Craven, Managing Director of Petroceltic, commented:

"B.R. 268 VG contains an existing oil discovery which has been successfully extended to the onshore area as confirmed by the Miglianico 1 and 2 wells which are now on production. We have already identified a significant structure around the ELSA 1 discovery in our License area and we are looking forward to working with our partners to arrange future drilling plans."

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