Verenex's O&G Resource Estimates Increase for Libya's Area 47


Libya, North Africa
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Verenex has announced that DeGolyer and MacNaughton ("D&M"), of Dallas Texas, has completed an updated assessment of oil and gas resources in the Company's discoveries and portfolio of exploration prospects in Area 47 effective September 30, 2008.

The assessment is an update to D&M's February 1, 2008 assessment to reflect new drilling and seismic results since the earlier report, including seven new wells (four exploration and three appraisal wells), 1,228 km(2) of new 3D seismic and 2,492 km of new 2D seismic. In summary, the aggregate of D&M's updated September 30, 2008 best estimate of gross contingent resources and risked mean estimate of gross prospective resources, on an oil equivalent basis, has increased by 36% to approximately 2.15 billion barrels.

The D&M assessment conforms to Canadian Securities National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Gross contingent (discovered) and prospective (undiscovered) oil and gas resources in Area 47 are expressed in the tables below as a range of estimates.

Area 47 Gross Contingent Resources

The updated D&M assessment of Area 47 gross contingent resources in the Lower Acacus, Middle Acacus and Memouniat Formations is based on results from 14 exploration and appraisal wells drilled and evaluated at September 30, 2008:

  • Seven discoveries in Block 2 at A1, B1, C1, D1, E1, F1 and G1-47/02;
  • Two discoveries in Block 4 at A1 and C1-47/04 (B1-47/04 assessment is pending testing results); and
  • Four appraisal wells A2, A3, A4 and D2-47/02.

The D&M best estimates of gross contingent resources are approximately 307 million barrels of oil and 269 billion cubic feet of raw gas, or 352 million barrels of oil equivalent.

Compared to the earlier February 1, 2008 assessment, the low estimate of gross contingent resources (oil equivalent basis) increased by 70% due to the success of the A4-47/02 appraisal well which increased the area of the A1-47/02 field and resource additions from three new discoveries at G1-47/02, A1-47/04 and C1-47/04 and new 3D seismic control that better defined the areal extent of earlier discoveries at B1, C1, D1 and E1-47/02.

The best estimate of gross contingent resources (oil equivalent) decreased by 11% due primarily to the results from the A3-47/02 and D2-47/02 appraisal wells. Both wells were low to prognosis and encountered water oil
contacts at or near the top of the target sands and reduced the best estimate size of the A1-47/02 and D1-47/02 fields. These impacts were partially offset by resource additions from the G1-47/02, A1-47/04 and C1-47/04 discoveries and technical revisions from an increase in the best estimate of oil recovery rate under water flood to 35 to 40% on particular sands compared to an earlier estimate of 34%.

The high estimate of gross contingent resources (oil equivalent) increased by 57% due primarily to an increase in the high estimate of the size of the A1-47/02 field to reflect possible extensions to the north and east based on new 2D seismic acquired in 2008. Resource additions from discoveries at G1-47/02, A1-47/04 and C1-47/04 also contributed to the increase as did technical revisions from an increase in the high estimate of water flood recovery rate to 48 to 51% from an earlier estimate of 43%.

Area 47 Gross Prospective Resources

The updated D&M assessment of gross prospective resources in Area 47 in the Lower Acacus Formation, as well as the Memouniat Formation in selected prospects, is based on a portfolio of 58 prospects. This portfolio has increased from 34 prospects and leads evaluated at February 1, 2008 due primarily to new seismic coverage, which identified new prospects and matured other leads into prospects, partially offset by the movement of drilled prospects to discoveries. Seismic coverage in Area 47 as at September 30, 2008
included:

  • 1,707 km(2) of Verenex 3D seismic (28% of Area 47);
  • 4,200 km of Verenex 2D seismic; and
  • 1,000 km of reprocessed vintage 2D seismic.

The updated D&M unrisked mean estimates of gross prospective resources are approximately 2.78 billion barrels of oil and condensate and 2.04 trillion cubic feet of raw gas, or 3.12 billion barrels of oil equivalent.
The corresponding geologic risk-adjusted mean estimates of gross prospective resources are approximately 1.60 billion barrels of oil and condensate and 1.16 trillion cubic feet of raw gas, or 1.80 billion barrels of oil equivalent.

Compared to the February 1, 2008 assessment, there is a 16% across-the-board increase in unrisked estimates of gross prospective resources (oil equivalent) due primarily to the increase in the number of prospects from 34 to 58 and an increase in total projected oil recovery rates reflective of increase oil recovery rates for contingent resources. The 51% increase in the risked mean estimate (oil equivalent) also reflects the impact of an increase in the aggregate probability of geologic success for the portfolio to approximately 58% compared to 44% in the earlier assessment.

Company gross contingent and prospective resources are taken as 25% of the gross estimates reflecting the Company's required share of capital funding requirements in any commercial development.
 

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