Verenex has provided an update of its operational activities in Area 47 in Libya and has advised that two high impact new field wildcat ("NFW") exploration wells H1 and I1-47/02 in Block 2 have been drilled and cased. Formation evaluation results indicate the presence of hydrocarbons in the Lower Acacus and Memouniat Formations in both wells.
These two wells are important because they extend the established Lower Acacus light oil play fairway and the emerging liquids-rich gas and condensate play in the deeper Memouniat Formation into the northern part of Block 2. Both wells were drilling at the time of DeGolyer and MacNaughton's September 30, 2008 resource assessment and as such, could only be assigned prospective resources.
H1-47/02 NFW Exploration Well Drilled and Cased and Preparing to Test
The H1-47/02 NFW exploration well is located in Block 2 approximately 8.0 kilometers north of the Company's nearest discovery at E1-47/02 and was drilled and cased to a depth of 10,475 feet in the Memouniat Formation. Extensive formation evaluation results indicate the presence of hydrocarbons in several sands in the Lower Acacus Formation and in a sand interval at the top of the Memouniat Formation.
The H1-47/02 well is significant for two reasons. Firstly, H1 is the most north-easterly Verenex well in Block 2 in a more tectonically affected area with both structural and stratigraphic trapping potential. The H1 well is located approximately 20 kilometers west of AGOCO's A1-NC04 oil and gas discovery in the Middle and Lower Acacus Formations, which tested 15,933 bopd of oil and 14 mmcf/day of gas as announced by the Libya National Oil Corporation ("NOC") in March 2007. AGOCO has since drilled three appraisal wells to this discovery.
Secondly, the Memouniat results provide further encouragement for this secondary exploration target in Block 2. The nearest successful flow test in the Memouniat Formation is at the Verenex A1-47/04 well located approximately 22 kilometers to the northwest in Block 4.
Preparations are underway to test up to four zones with the KCA DEUTAG Service Rig 32 which could extend to mid-December 2008.
I1-47/02 NFW Exploration Well Drilled and Cased
The I1-47/02 NFW exploration well is the first Verenex well in the north-western part of Block 2 and is located approximately 6.5 kilometers southeast of the nearest oil and gas discovery G1-NC02 drilled by AGOCO in 2001.
The I1 well was drilled and cased to a depth of 10,925 feet in the Memouniat Formation. Extensive formation evaluation results indicate the presence of hydrocarbons in a thick basal sand interval in the Lower Acacus Formation and in sands at the top of the Memouniat Formation.
The I1 formation evaluation results are encouraging and have the effect of significantly expanding the Lower Acacus play fairway into the northern part of Block 2 and the prospective exploratory area for the Memouniat Formation.
The Company plans to test up to two zones in the I1 well after the H1-47/02 well tests are completed.
The NOC has approved the J1-47/02 NFW exploration well location in the southern part of Block 2 on a stand alone structural prospect identified on the new 2008 2D seismic. The J1 location is approximately 6.0 kilometres north of the A1-47/02 discovery well and could also prove a possible northern extension to the A1-47/02 field. The J1 well is expected to spud with the Ensign Rig 28 in the next few days and drill to the Memouniat Formation.
The KCA DEUTAG Rig T-19 is being moved to the K1-47/02 NFW exploration well location on a prospect located approximately 6.3 kilometers south of the I1-47/02 well. The K1 well is expected to spud by the middle of November, subject to the final approval of the NOC, and drill to the Memouniat Formation.
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