EnerGulf Resources Receives Assessment on Namibia Offshore Block 1711

EnerGulf Resources has received Netherland, Sewell & Associates, Inc. Prospective Resource Assessment of the Kunene and Hartmann Prospects located in Block 1711 offshore Namibia. The report is in accordance with Canadian NI 51-101 and other Canadian, United States and International standards. NSAI was engaged by EnerGulf to prepare the report in part as the due diligence basis requested by financing sources.

Block 1711 is situated in the Namibe basin off the northern coast of Namibia along the international boundary with Angola. The two separate exploration prospects, the Kunene and Hartmann, have been identified by extensive modern seismic data on the 893,100 hectare (2.2 million acre) block. EnerGulf has a 10% working interest in the project.

The report covers the oil case and an alternate (and completely independent) gas case for the Kunene and Hartmann Prospects and gives Prospective Hydrocarbon Resource estimates in "Low" (Conservative, P90 confidence level), "Best" (Realistic, Most Likely), and "High" (optimistic, P10 confidence level) categories in each case. The Report's risk analysis provides a range of probabilities of hydrocarbon occurrence for both the Kunene and Hartmann. Additionally, NSAI conducted a scoping economic analysis of the Kunene Prospect using the "Best Estimate" for both an oil case and a gas case.

Specifically, the NSAI report provides the following: (MMBO=Millions of barrels of oil: BCF=Billions of cubic feet of gas)

                     Unrisked Gross (100 Percent)
                   Prospective Hydrocarbon Resources


                               Oil          Gas
Prospect                      (MMBO)       (BCF)

  Low Estimate                  126         123
  Best Estimate                 454         445
  High Estimate                 921         899

  Low Estimate                  863         618
  Best Estimate               2,704       1,928
  High Estimate               5,118       3,671


  Low Estimate                   11         720
  Best Estimate                  38       2,561
  High Estimate                  78       5,209

  Low Estimate                   69       4,592
  Best Estimate                 211      14,064
  High Estimate                 399      26,461


Probability of Success:
Kunene: 10-16%
Hartmann: 7-13%

The NSAI report states "As the first well drilled in the license area will be at the Kunene prospect, a successful test there will significantly reduce the risk of the Hartmann Prospect by reducing uncertainty pertaining to reservoir, source, and seal."


The following estimates are based on an unrisked gross (100 percent) of the best estimate of the prospective hydrocarbon resources on the Kunene Prospect. The initial net prices, for the purpose of the analysis are $62.59 per barrel for the oil case (including $3.00/ bbl for transportation and processing costs) and $3.08 per MCF for the gas case (including $4.00/MCF for transportation and the various processing costs). The base product prices, facility and operating costs are escalated at 3% per year. Included in the capital costs are provisions for exploration and delineation wells to evaluate the prospect with production beginning in 2014.

KUNENE PROSPECT      Unrisked Best Estimate   Unrisked Best Estimate
                     Net Revenue              After-Tax Cumulative
                     After Income Tax         Present Worth
                                              Discounted at 10%
OIL CASE (US$000):       $18,832,849             $5,371,504
GAS CASE (US$000):       $11,614,159             $2,737,451

The Kunene prospect is defined by a 650-square-kilometer 3-D seismic survey. The structure forms a four-way dip closure covering 82 square kilometers, with vertical closure of over 400 meters. A test well at Kunene would be expected to be drilled to a total depth of approximately 3,625 meters in approximately 900 meters of water, at a cost of approximately US$21,200,000, including testing and completion or abandonment costs.

The Hartmann prospect has been delineated by 1,085 km of 2-D seismic. It is identified as a stratigraphic trap with an area of 377 square kilometers and approximately 1,600 meters of vertical relief. A Hartmann test well is anticipated to be drilled to a total depth of approximately 3,500 meters.

The Kunene and Hartmann Prospects reservoirs are thought to be reef or carbonate bank buildup. Analog reef type oil and gas fields around the world include the Malampaya Field (offshore Philippines), the Tengiz Field (onshore Kazakhstan) and the fields of the Golden Lane trend (onshore and offshore Mexico).

Moscow based Sintezneftegaz is the operator with a 70% working interest. The exploration work program calls for a 4 year license term with two 2 year renewal periods. There is a two exploration well commitment with the first exploration well to be drilled by the end of year two, being March 2008. EnerGulf's commitment for 10% of the costs over the first 4 years is US$8,400,000 with an additional US$3,700,000 commitment over both renewal periods combined.

Commenting on the Netherland Sewell Report, EnerGulf Chairman Jeff Greenblum said, "We are very pleased to have an interest in such an outstanding exploration prospect with the potentially dramatic high impact upside Block 1711 offers. The Netherland Sewell report is consistent with historical estimates of the resource potential and risks for the block and the report clearly confirms our belief that Block 1711 is a world class exploration prospect. EnerGulf's capitalization structure allows us significant flexibility in our financing options, and as we move into this next phase of commencing the exploration program on Block 1711, we continue to work to advance our other projects and aggressively seek out, evaluate and pursue other prospects that meet our criteria."


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