Melrose Cites 2.5MM Barrel U.S. Reserve Increase
Melrose Resources plc
Wednesday, July 30, 2008
Melrose Resources plc provides the following information on its reserves and operations in the USA. The results have now been obtained from a technical evaluation of Melrose's reserves in the Permian Basin in West Texas and Eastern New Mexico.
The evaluation, which has been confirmed by independent consultants, concludes that Melrose's net proved oil reserves in these properties will increase by 2.5 MMbbls, an increase of approximately 22% of net proved oil reserves in the USA at the beginning of the year of 11.3 MMbbls. Also, in the light of the ongoing and planned activity on the leases, the Company will book net probable oil reserves of 5.2 MMbbls. Further upside exists in possible reserves which are estimated at 14.8 MMbbls and which could be targeted by further infill drilling to downspace two of the main field areas to 10 acres. In addition, two of the field areas are also viewed as being suitable, in due course, for tertiary recovery projects using CO2 injection.
Plans are currently being finalized for the drilling of two exploration wells in Harris County, Texas. The Nunan No.1 well, which will offset a well previously drilled on Melrose's acreage, has four principal targets including a shallow oil prospect with reserves of 3 MMbbls and an estimated chance of success of 50%. Three deeper gas targets in the well have estimated reserves of 25 Bcf, 12 Bcf and 62 Bcf with estimated chances of success of 25%, 16% and 19%, respectively. It is expected that the Nunan well will spud in late September and it will be followed by the Ramsey No.1 exploration well. This will twin a well previously drilled on the acreage in which 58 ft of pay was identified by petrophysical analysis but which was not tested due to technical problems. Target reserves in the Ramsey No.1 are estimated at 26 Bcf and the chance of success is estimated at 50%.
Also in Harris County, the successful Holmes No.4 appraisal well which was drilled in June 2008 and discovered 10.2 Bcf of reserves has been completed. The well is being tied into to the local gas sales line and first production is expected by mid-August.
David Thomas, Chief Executive, said, "The review of our Permian Basin properties has confirmed our view that these are very solid assets which provide Melrose with a good platform for reserves and production growth over the next few years. We are also excited by the planned exploration wells in East Texas which, in view of the concession terms and the gas price environment in the USA, are potentially highly material wells for the Company."