Melrose Underscores Operational Highlights in Egypt, US

Melrose has provided an update on its drilling and production operations in Egypt and the United States.

Egypt

The West Dikirnis No.7 horizontal development well has been placed on production and is flowing 3,000 bpd of oil with 4.4 MMcfpd of gas on a 36/64 inch choke. The well's flow rate is currently being restricted to gather well and reservoir performance data prior to potentially increasing the production rate.

The EDC-9 rig is currently drilling the second horizontal development well in the West Dikirnis field, West Dikirnis No.10, which has reached a depth of 9,110 feet. In addition, the EDC-54 rig is preparing to drill the first horizontal production well in the Tamad field, Tamad No.5, where there is the potential to add in excess of 1.0 MMbbls of oil reserves using horizontal well drilling technology.

The East Dikirnis No.1 exploration well has been successfully drilled with the EDC-54 rig to test a Qawasim formation prospect located approximately 11 kilometers to the east of the West Dikirnis field. The well encountered 38 feet of gas overlying an 11 feet thick oil rim with an average porosity of 23 percent. The estimated discovery volume is in the range 10 Bcfe to 12 Bcfe and the well has been temporarily suspended for possible future sidetracking and use as a production well.

The East Abu Khadra gas field was brought on stream via the South Batra facilities on December 23, 2008 and is currently flowing at 7.9 MMcfpd of gas and 125 bpd of condensate.

United States

The East Texas Nunan No.1 exploration well spudded on January 15, 2009 and has reached a depth of 3,485 feet. The well is targeting a number of different pay zones including a shallow oil prospect with unrisked reserves of 3 MMbbls and a chance of success of 29 percent and three deep gas prospects with combined unrisked reserves of 99 Bcf and an averaged chance of success of 21 percent. The planned Ramsey No.1 exploration well has been deferred to take advantage of an anticipated reduction in US drilling rig and services rates.

Commenting on the update, David Thomas, Chief Executive said, "We are pleased with the results from East Dikirnis No.1 which confirm the presence of further oil rim accumulations in the Mansoura concession and we shall be evaluating development options for the discovery over future months. We also look forward to progressing the Nunan No.1 exploration well in East Texas which will test a number of different reservoir horizons."