Cirrcus Cites Operational Updates in Netherlands

Cirrus announced the following operational update regarding ongoing activities in The Netherlands.

2010 Drilling Program
M07-07 (Cirrus 42.75%, operator)

The M07-07 well was spudded on June 8, 2010 and is currently drilling on schedule with 13 3/8" casing being run to 1,793mMD. It is expected that the planned total depth of 4,185 meters (2,950 mTVD) will be reached in a further 30 days. Estimated drilling cost (excluding the cost of completion and testing) is approximately C$17.8 million gross (C$7.6 million net).

Partners in the well are the Dutch state participant, EBN B.V. (50%), TAQA Offshore B.V. (5%) and Energy06 Investments B.V. (2.25%).

L11b-A07Z (Cirrus 25.5%, operator)

Cirrus continues to evaluate all technical and commercial options to optimize the commercial development of the substantial hydrocarbon volumes in place in the L08-D field. While this work is ongoing, Cirrus has elected to not exercise the option on the Noble Lynda Bossler drilling rig to drill this well as the third well in the current drilling program.

MSG-03 (Cirrus 47%, operator)

The MSG-03 deviated well is planned to be drilled from an onshore surface location within the Port of Rotterdam to test the offshore Q16-Alpha prospect. The primary reservoir target is a Triassic-aged Bunter sandstone in a structural closure mapped on 3-D seismic. Cirrus' internal estimate of chance of success is 65% with a most likely gross, unrisked, recoverable resource potential of 29 Bcf. Planning applications for a drilling and production site have commenced and commercial negotiations with the Port authorities are ongoing. To fully complete the planning process and optimize the commercial terms it now seems likely that the well will be delayed into 2011.

The MSG-03 well has an estimated drilling time of 56 days to reach total planned depth of 5,050 meters MD. Estimated drilling cost (excluding the cost of completion and testing) is approximately C$15.1 million gross (C$7.1 million net).

Partners in the well are expected to be the Dutch state participant, EBN B.V. (40%), TAQA Offshore B.V. (10%) and Energy06 Investments B.V. (3%).

Production Operations

L08-D Field (Cirrus 25.5%, operator)

Gross production from the L11b-A06 well has averaged 4.1 MMscf/d in May 2010. At these low rates, and at current gas prices, production revenues are approximately equivalent to the operating costs of the production platform and consideration is being given to all ways to optimize production and cashflows until the next well on the field is drilled.

M07-A Field (Cirrus 42.75%, operator)

Cirrus has been advised that the planned shutdown of the third party L09-FF processing platform for routine annual maintenance is expected to last longer than planned due to additional unplanned repairs. It is currently expected that M7-A production will recommence by the third week of July, 2010 at increased gross rates of 31.7 MMscf/d reflecting revised contractual offtake terms. Excluding the impact of the shutdown, gross production over 19 days in May 2010 has averaged 24.2 MMscf/d which has slightly exceeded the current contractual offtake capacity of 21.4 MMscf/d.

Cirrus' President, David Taylor, commented, "The L08-D field contains a significant volume of gas with a best estimate Petroleum-Initially-In-Place of 323 Bcf. The first well we successfully drilled into the field, L11b-A06, initially produced at 32 MMscf/d from three reservoir zones however production performance to date has indicated the presence of reservoir compartmentalization, at least in the area of the A06 well. The impact of compartmentalization is that the field will require more wells to develop and we are committed to doing all that can be done to reduce development risk and improving the probability of commercial development of the field before embarking on significant further capital investment. At the same time, we are going to pursue improving Cirrus' commercial terms in the L08-D field to achieve an acceptable risk profile for Cirrus."


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