The Company also announced that Schlumberger has verified that the promising electric logging results for its first well target (EWA-2X) are accurate. In particular, the Company and its consultants have concluded that EWA-2X's logging which indicated two oil columns totaling a minimum of 169 feet in thickness is accurate. The detailed logging results were previously released in the Company's press release dated December 22, 2002. In effect, several lines of present evidence suggest that the hydrocarbons were possibly displaced from the wellbore by seawater/mud filtrate and that the oil zones tested in the Middle Miocene Kareem Formation ("Kareem") and the Eocene Thebes Formation ("Thebes") Formations may contain moveable oil. EWA-2X is located in the southwestern corner of the area covered by the East Wadi Araba Concession in the Gulf of Suez, Egypt.
After two weeks of additional analysis, the Company has determined that during the drill stem testing of its EWA-2X first well, based on measured salinities, the only fluids that flowed from this well during testing was the mud filtrate and sea water used for drilling, and at no time did formation water ever come to the surface. This lack of formation water is a significant indication of possible moveable oil in the zones tested in the Kareem and the Thebes zones. The possible reasons that EWA-2X's drill stem testing failed to flow oil were included in the Company's press releases dated January 6th and 13th, 2003.
The Company's partner Egyptian General Petroleum Corporation, like Dover Petroleum, is encouraged by the electric logging results at EWA-2X and has offered the Company priority to obtain another drill slot to go back to the EWA-2X site and drill a step-out exploration well (EWA-3X) by July 2003. EWA-3X will be drilled at the same surface location using an improved drilling fluid system and deviated at a 38 degrees angle to test the Kareem and Thebes zones in an area where there has been no invasion of drilling fluid from EWA-2X. In addition, the lower Matullah and Nubia zones would also be drilled at EWA-3X to test for additional zones of hydrocarbons. The presence of significant oil zones logged in the Kareem and Thebes Formations is believed encouraging for the chances for additional oil being reservoired in the deeper sands of the Matullah/Nubia which were the important untested targets in the original EWA-2X well.
If this follow-up well (EWA-3X) proves commercial hydrocarbons, then Dover can re-enter the original EWA-2X well with a view to completing it as a potential producer after remedial work on the Kareem/Thebes reservoirs. Having the two wells at the same surface location means that they can be hooked up to the same production platform during any subsequent development of the field.
The company is optimistic that further drilling at EWA-3X could yield a commercial oil discovery. The Company's Geophysicist, Dr. Ghareeb Awad, has estimated that potential reserves at the EWA-2X target could range from 43,000,000 to a possible 274,000,000 barrels of recoverable oil reserves from only the Kareem and Thebes zones. However, no assurances can be provided that EWA-2X/3X contains any crude oil, or if such crude oil exists, it can be recovered in a commercially viable manner. In addition, substantial additional capital will be required in order to bring such oil into production, and no assurance can be provided that such capital will be available.
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