The farm-in to the Grombalia Permit in northern Tunisia will give Circle a 36% working interest with the operator Exxoil Tunisie and ETAP as partners. The work program includes acquiring a small amount of 2-D seismic in late spring 2007 and the drilling of two mature prospects presently planned for the fourth quarter 2007 and first quarter 2008. The first well is planned to be drilled into a fault block targeting a level that is producing in an adjacent field. The second well is planned to be drilled in very shallow water close to shore. This well will test a larger structure with two-way dip and two-way fault closure within the same geological sequence that has seen a number of drilling successes within the Permit.
The second farm-in, into the Ras Mamour Permit in southern Tunisia, will give Circle a 23% working interest and will include the drilling of one onshore well. This well is presently scheduled for fourth quarter 2007/early 2008 and will target a geologically similar sequence and structure close to the producing Ezzaouia Field.
These farm-in agreements give Circle Oil the opportunity to participate in drilling wells with short lead times. The maturity of the prospects and the proximity to existing production in geologically related, adjacent and analogous situations were significant factors in Circle Oil's decision when entering into these agreements. Each of the wells will be drilled with the possibility, if successful, to be put into early production. The initial capital expenditure under the two farm-in agreements will be met out of Circle's existing working capital resources.
A number of other potentially good prospects have been identified within the two permits, which can be considered for future drilling.
David Hough, CEO Circle Oil, stated:
"We are delighted to be working in Tunisia and look forward to a long-term relationship with our new partners. It is planned to drill three mature prospects in a proven oil province, two of which are adjacent to existing production and the third is in a geological setting which has seen previous successes. For Circle Oil, these farm-in agreements represent a further step in the company's evolution towards becoming a balanced exploration and production company.''
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