The purchase of the additional 5.5% interest in M'Boundi, 2% in Kouilou from Eni has been completed, subject only to agreement of the adjustments since the effective date of January 1, 2007.
Gross production in H1 2007 was 21,800 bopd compared with an average of 19,940 bopd in FY 2006. Three drilling rigs are currently in operation (two deep, one shallow) alongside four workover rigs, all owned by Burren. An additional workover rig has been purchased.
Water injection continued to show excellent results in the shallow horizons whilst deep water-injection, temporarily suspended, is expected to resume in August after the completion of new water-supply wells.
Gross production in H1 in Congo was 53,300 bopd, compared with and average of 56,000 bopd in 2006 as a whole.
On the M'Boundi field, a total of seven water injection wells were completed in H1 with a restricted injection rate of 8,500 bwpd, awaiting the drilling of additional water-supply wells. Observed injectivities, especially in the Vandji C reservoir, which contains approximately 40% of the oil, have been higher than anticipated. The upgrade of the water treatment and injection facilities to a capacity of 60,000 bwpd is due to be completed during the Q3 and the next stage of the capacity upgrade to 120,000 bwpd is on target for completion by the middle of 2008. In order to produce the reservoir efficiently, some very high gas-oil ratio wells have been shut-in with minimal impact so far on oil production. This program will continue however the timing remains uncertain. Production for H2 for the M'Boundi field is forecast at between 45,000 to 48,000 bopd.
On the northern La Noumbi concession, which is operated by Maurel & Prom, the first well on the Dongou prospect is expected to spud in August. The time-table for Kouilou exploration drilling will be determined following completion of a technical review by Eni.
In Egypt, subject to Government approval, we are in the process of mobilizing a rig from China to drill an exploration well in Q4 on the 100% owned East Kanayis block, targeting a potentially material gas structure in the deep Jurassic section. Seismic acquisition will start during H2 in Block 6 in Yemen (Burren 88%). In Oman, after reviewing the newly acquired seismic, partners have decided not to proceed into the drilling phase and notified the authorities to relinquish Block 50 as of 1 August 2007.
Following the successful drilling of the PY-1 appraisal well earlier in the year and the subsequent signature of a gas sales agreement, Hindustan Oil Exploration Company ("HOEC") is proceeding with this offshore gas development. In addition HOEC successfully drilled two exploration wells both finding oil in the Cambay basin. Further, two exploration wells in Assam are planned for Q4 2007.
Atul Gupta, Chief Executive, commented:
"Higher oil production, focus on costs, a rising oil price and an un-hedged position has led to a successful first half of the year. The second half of the year will focus on the continued implementation of our plan to increase recovery factors on our core fields through water injection and development drilling, as well as the drilling of exploration wells in Egypt, Congo and India".
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