The Disraeli site is immediately southwest of the 2005 Saxon oil discovery in Block 21/23b, in the Eocene aged Tay sand reservoir. Oilexco is paying 95% of the costs to evaluate the Eocene Tay sand reservoir (at approximately 5000 feet) at Disraeli to earn on a farm in basis a 65% interest in Block 21/23a to the base of the Eocene Tay stratigraphic interval. In addition, seismic and rock physics studies on the Disraeli prospect by Oilexco's technical partner Ikon Science indicate the presence of a larger Jurassic Fulmar prospect below the primary Eocene Tay target. Oilexco will pay 95% of the costs to evaluate this deeper horizon (at approximately 9000 feet) to earn on a farm in basis, an 85% interest in Block 21/23a in all stratigraphic horizons below the Eocene Tay sand.
At Oilexco's 100% owned Brenda Development project, operations are on schedule and under budget. Drilling has been completed on two of the four horizontal production wells. Drilling operations are currently in progress on the third horizontal production well. The results experienced to date have met, or exceeded the Company's expectations. First oil from the Development continues to be targeted for October.
"We are disappointed that the drilling results at Joy are unfavorable, but it must be noted that Oilexco has achieved enviable drilling success in the near-by areas of Nicol and Brenda in Block 15/25. The Joy well was drilled on Block 15/25c, a 20th Round License expiring in July, to assess the hydrocarbon potential of a small structure that would otherwise be uneconomic if not for Oilexco's Nicol oil development project located to the south", said Arthur Millholland, President and CEO of Oilexco. "We have an active appraisal and exploratory drilling program ahead of us in the UK North Sea in 2006, which is part of our $280 million US capital budget in this fiscal year, of which Joy being the first well in the program was a very small budget component at approximately $5 million US. Having the semi-submersible Sedco 712 under long term contract through to the end of March 2008, and the semi-submersible Bredford Dolphin under a three well contract that commenced in March of this year allows us to execute our 2006 drilling program, as well to ensure the development in 2006 of the Brenda and Nicol oil accumulations."
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