Indago Petroleum Takes Stake in Saleh Concession Offshore UAE

Indago Petroleum has entered into a new Petroleum Concession Agreement with the Government of Ras Al Khaimah, which is the northern most emirate of the UAE, in addition to a Joint Operating Agreement with its partner in this venture, the Ras Al Khaimah Gas Commission ("Rakgas"), a Government company.

The concession area encompasses an offshore gas field called Saleh located 42km offshore Ras Al Khaimah in the U.A.E. The Saleh field is a multi well, multi platform development that has been producing since 1984. After peaking at approximately 70 MMscf/d gas rate and 13,000 bbls/d condensate rate in 1986 the production has declined due to pressure depletion and encroaching water. Saleh production now currently averages approximately 100 bbls/d of condensate and small amounts of gas. The gas / condensate product is treated at the onshore processing plant in Ras Al Khaimah operated by Rakgas, which also processes production from the Indago operated Bukha field.

The Joint Venture (Indago as operator with 40% and Rakgas with 60%) intends to conduct a full study of the field including the processing and interpretation of a 3D seismic volume that was acquired previously. Indago hopes to improve significantly imaging of the sub-surface geology using the latest seismic processing techniques and equipment. Indago believes the field could have remaining, unrealised potential which may result in the drilling of additional production wells to enhance production rates and increase the recoverable reserves.

Indago expects to provide further updates on the Saleh project during the next 12 months.

Over the past few months, following the disappointment of the Hagil exploration well onshore Ras Al Khaimah announced in January this year, Indago has been integrating that well's data into our technical assessment of the block and in particular the Ash Sham prospect . After open, constructive and cordial discussions with the Government of Ras Al Khaimah concerning an amended work program, the Company has been informed that the Government prefers to award the acreage to another party.

Peter Sadler, CEO of Indago Petroleum commented

"The reservoirs in Saleh are the same formations as those which are producing in Bukha, and have been tested in both West Bukha and the RAK B accumulation, all of which are currently operated by Indago. Technically, operationally and commercially this project fits precisely into our strategy."

"Any future enhancement of the Saleh field production is facilitated by the existence of several platforms with a pipeline connecting to the onshore processing plant. We expect any new wells can be brought onto production immediately following drilling with little or no facilities investment required. Futhermore, joint venturing with Rakgas - a major, local processing, sales and marketing company - creates an ability to bring any incremental gas production speedily to market."

"The relinquishment of the block onshore Ras Al Khaimah is a consequence of our risk/reward assessment following the Hagil well. I wish the next concession holder good fortune pursuing their ideas while we concentrate our efforts on the rest of our growing portfolio."

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