Circle Oil Egypt Ltd (COEL), a Circle Oil & Gas wholly owned subsidiary, has signed a farm-in agreement covering the exploration and exploitation of hydrocarbons with Vegas Oil and Gas SA for the NW Gemsa Block in Egypt.
The agreement, which is subject to ratification by Egyptian General Petroleum Corporation (EGPC) and the Minister of Petroleum, will result in Circle Oil holding a 40% interest in the concession. Vegas Oil and Gas is operator with a 50% interest and Premier Oil plc 10%.
The NW Gemsa concession, which covers an area of over 400 square kilometers lies about 300 kilometers southeast of Cairo in a partially unexplored part of the Gulf of Suez Basin. It includes the Al Amir-1 well which discovered oil in April 2005. This well flowed 787 barrels of oil per day on test.
The concession agreement has recently entered its second phase of three and is valid for a further two and a half years. It has the right of conversion to a production licence of 20 years, plus extensions, in the event of commercial discoveries.
As part of the agreement Circle will contribute towards the cost of the Amir SE-1 exploration well which will target the Nubia Sandstone at a depth of 12,870 feet. The Nubia Sandstone is a well known producer within the Gulf of Suez Basin and in the area of the proposed Amir SE-1 exploration well, it is approximately 1200 feet thick. The drilling rig contract is due to be concluded shortly and the well is scheduled to commence drilling in early February 2008. The structure is a partial dip and fault closure and has an operator estimated potential of 100MMBO in situ based on the present outlined closure area.
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