Emerald Reviews Ops in Colombia, Syria

Emerald Energy Plc on Tuesday issued the following update for the period since September 2006:

Colombia - Exploration and Development

Three new exploration and production contracts, Maranta, Ombu and Helen, have been added to Emerald's exploration portfolio. All three contracts have been awarded by the National Hydrocarbon Agency of Colombia ("ANH") and a copy of the model contract terms can be found on the ANH website (www.anh.gov.co).

The Maranta contract covers an area of 365 sq. km located north-east of the producing oil fields in the Putumayo Basin in southwest Colombia. The initial phase of the exploration period will be 18 months, commencing 12 September 2006, and the minimum work program comprises the acquisition of 30 km of new 2D seismic data and the re-processing of 40 km of existing 2D seismic data. Emerald currently has a 100% working interest in the Maranta Contract.

The Helen contract covers an area of 213 sq. km also located in the Putumayo Basin. The initial phase of the exploration period is up to 16 months, commencing 26 December 2006, and the minimum work program comprises the acquisition of 30 km of new 2D seismic data and the re-processing of 120 km of existing 2D seismic data. Emerald has entered into an agreement, subject to ANH approval, with Vetra Group LLC. ("Vetra") under which Vetra will pay 100% of the cost of the initial phase of exploration, will be assigned an 85% interest in, and operatorship of, the Helen contract. Emerald will retain a 15% interest in the contract and will be fully carried through the initial phase of exploration.

The Ombu Contract, in which Emerald has a 100% working interest, covers an area of 300 sq. km located in the Caguan Basin, to the south-west of the Llanos Basin, in Colombia. The initial phase of the exploration period is 11 months, commencing 15 December 2006, and the minimum work program comprises the acquisition of 61 km of new 2D seismic data and the re-processing of 60 km of existing 2D seismic data. Emerald is evaluating a possible re-entry of an existing well in the block that tested hydrocarbons.

A 58 sq. km 3D seismic survey has been completed across the Gigante field structure and the seismic data are now being processed. The results from the processing will be used to refine the structural interpretation and evaluate the potential for further development of the Gigante field, including the drilling of the Gigante No.2 well. The 3D seismic survey, covering the Gigante structure, will also be used to optimize the location of any future development wells.

The Saxon Rig 223, under contract to Emerald until January 2008 commenced drilling Emerald's Aureliano No.1 exploration well on the Fortuna block in mid December. The Aureliano prospect lies adjacent to the Totumal oil field which produced more than 0.8 mmbbl of oil from La Luna, a Cretaceous limestone formation, until late 1980s, when it was shut-in by Ecopetrol. The Aureliano No.1 well was drilled to its total depth of 8,745 ft in January 2007. The well is currently being flow tested to determine the potential of the Aureliano structure as a commercial development. The initial testing is expected to be completed before the end of the first quarter 2007.

The Saxon Rig 223 is now on loan to another operator and is expected to be returned to Emerald in the Llanos basin in the second quarter of the year to proceed with Emerald's exploration and development drilling schedule which includes the drilling of Campo Rico No. 4 well in the Campo Rico field. Under the commerciality status granted by Ecopetrol for the Campo Rico field development, the drilling costs for this development well, are shared with Ecopetrol on a 50/50 basis.

The Las Acacias No.1 well, drilled in the first half of 2006 to the south of the Vigia field in the Campo Rico block, has been configured as a permanent disposal well for the produced water from the Vigia field and a pipeline installed between the Vigia field and the well, thus reducing the ongoing cost of transporting and disposal of the water.

The Centauro South field, which was discovered in the second quarter of 2006, is on production from two wells. A flow line is being installed between this field and the Campo Rico field production facilities so that the fluids may be gathered and processed cost-effectively using the existing facilities.

Colombia Production

Daily gross production for the second six months of 2006 averaged 3,663 bopd, compared to 3,677 bopd achieved in the first half of 2006. Production in the second half of 2006 was affected by the failure of an electric submersible pump ("ESP") in the Gigante No.1A well and the subsequent two week period when production was shut-in while a suitable rig was sourced for the workover. A new ESP, incorporating design modifications, has now been installed in the well and production restored.

Emerald currently has ten production wells with nine on production currently lifting approximately 3,600 barrels of oil per day. The Campo Rico field has three wells on production at an aggregate rate of about 1,300 bopd. The Vigia field has three wells on production at a combined rate of about 550 bopd. The Centauro Sur field has two wells on production at a combined rate of about 700 bopd. The Gigante field is producing approximately 1,050 bopd from the Gigante No.1A well. Silfide No.1 remains shut-in.

The Gigante and the Campo Rico fields are operated as joint operations with Ecopetrol with both production and costs shared between the parties in accordance with the relevant association contracts. Applications to Ecopetrol for commerciality status of the Vigia, Silfide and Centauro Sur fields are being progressed by Emerald.

Syria, Block 26 Exploration

The Tigris No. 1 well, testing the Tigris prospect located beneath the large Souedieh field, was spud in September 2006. The well is currently drilling through the Palaeozoic geologic section and has a planned total depth of approximately 4,500 meters.

Tigris No.1 is the second of four commitment wells to be drilled during the initial exploration phase of the contract for Block 26 that ends in August 2007.

A program of 266 kilometers of 2D seismic has been successfully completed in Block 26. The data has been processed and is now being interpreted. The new seismic data will be integrated into the existing geological model of Block 26 to optimize the remaining work program in this phase of exploration.


In Colombia the Company is evaluating the Aureliano structure and if determined to be commercial will source a local drilling rig to commence an appraisal and development drilling program. The Saxon Rig 223 will return to Emerald's Llanos operations in the second quarter of 2007 and will resume drilling in the Campo Rico Block. The seismic acquired over the Gigante structure when processed, will be used to finalize the drilling plans for the Gigante No2 development well.

The Company continues to identify prospective acreage in Colombia to be explored under additional exploration contracts issued by the ANH.

In Syria the Company is committed to drilling at least two more exploration wells before August 2007 when the initial exploration phase for Block 26 ends. The acquisition of 266 km of 2D seismic and additional geological work has greatly enhanced the understanding of the blocks prospectivity and the selection of the next two drillable prospects will be made shortly.

Emerald continues to review growth opportunities, including in other geographical areas, as new licenses, farm-ins and acquisitions.

Angus MacAskill, Emerald's Chief Executive Officer, said:

"We have seen considerable progress in the Company's exploration strategy for delivering cost-effective growth with the addition of three new contract areas in two new basins in Colombia, and the commencement of drilling to test prospects in both Colombia and Syria.

"2007 will be an exciting year for Emerald starting with the results of Tigris and Aureliano exploration wells expected in the first quarter, development activities in Campo Rico and Gigante in Colombia, two further exploration wells in Syria and the advancing of exploration activity in Colombia."

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