On February 6, 2007 the Company and the Libyan National Oil Corporation ("NOC") announced the A1-47/02 well as an oil discovery. At the time, testing results from an 82-foot interval at the base of the Lower Acacus Formation at a depth of 9,980 feet were released. This interval flowed over a three hour period at rates up to 5,172 barrels of oil per day (gross) through a 3/4 inch choke at a wellhead pressure of 1,221 pounds per square inch. An associated gas rate of 6.7 million cubic feet per day (gross) was also achieved during this test.
Final testing results on several other intervals in the A1-47/02 well are under review by the Company and the NOC.
B1-47/02 Well Completed and Will Be Tested
The Company has also completed an extensive wireline logging, coring and formation evaluation program involving down-hole fluid sampling and pressure measurements at its second exploration well B1-47/02 in Area 47. Based on these results, the well was cased to its total depth of 11,030 feet.
Service Rig 32 will begin production testing of selected zones in late March as soon as the drilling rig has been moved from the well location. Testing could extend into late May.
Until producibility is confirmed by this flow testing program, well results and status are considered preliminary.
The well was drilled, cored, logged and cased in 62 days compared to a target of 85 days and 87 days for the Company's first well A1-47/02. A revised casing program to deal with potential lost circulation intervals, more extensive use of PDC drilling bits and down-hole motors to increase penetration rates, and the growing experience of the drilling crew all contributed to this improved performance.
C1-47/02 Approved as Third Exploration Well
The Company has received NOC approval for its third exploration well, C1-47/02, which is expected to commence drilling with ODE Rig 28 by early April 2007. The C1-47/02 well is located approximately 7.5 kilometers southeast of the B1-47/02 well and will test a separate structure defined on high quality 2D seismic shot by Verenex in 2006. The primary exploration target is the Lower Acacus Formation.
The well is expected to be drilled to a depth of approximately 9,900 feet and qualifies as the third and final minimum commitment exploration well under the Exploration and Production Sharing Agreement ("EPSA") for Area 47. Estimated time to drill, core, log and case the well is approximately 80 days (including a contingency allowance).
Offset Operator Reports Oil Discovery
The Company notes that the NOC announced on March 12, 2007 that its 100% owned affiliate AGOCO had made a major oil discovery in Block NC4 which is adjacent to the eastern boundary of Area 47. The well was tested at a rate of 15,933 barrels of oil per day from the Middle and Lower Acacus Formations. The area of the discovery is approximately 37 kilometers northeast of the B1-47/02 well.
Verenex is a Canada-based, international oil and gas exploration and production company with a world-class exploration portfolio in the Ghadames Basin in Libya and the Bay of Biscay offshore France. Verenex is the operator and holds a 50% working interest in Area 47 in Libya. Under the EPSA terms for Area 47, Verenex would receive an initial production allocation (free of all taxes and royalties) of 6.85% in any commercial development scheme.
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