Petroceltic: Oil Shows Insufficient at Tunisia Well

Petroceltic announced an operational update on its current drilling activity.

Algeria

Ain Tsila Field. (Petroceltic Interest 75%, Operator, partner Sonatrach, 25%).

Preparations for the 2010/2011 Ain Tsila field appraisal campaign, which will commence in November and continue into 2Q 2011, are progressing well. Civil engineering works have been completed at the AT-4 well location on the Ain Tsila discovery in Algeria and the site is now ready to receive the Dalma No. 12 rig for the commencement of drilling.

It is currently estimated that the AT-4 well will commence drilling in the first week in November. The AT-4 well is scheduled to take around 40 days to drill and will be the first in a multi-well appraisal drilling program that will continue over the next six months on this substantial discovery.Each well in the current campaign will be tested and, if necessary, fracture stimulated without using the rig.

Currently three well locations have been approved by the partnership. It is anticipated that a fourth well will be drilled with this rig under the existing contract.AT-4 will be a vertical well, whereas AT-5 and AT-6 are planned as horizontal well tests of the Objective Ordovician formation.

The main focus of this appraisal program will be to confirm the most likely recovery factors, to optimize the development plans for the discoveries and likely gas sales contracts. Petrocetic expects to confirm the recoverable hydrocarbon reserves estimates associated with the discoveries after completion of the appraisal work program.

The previous 2009/10 five well drilling and testing program on the Isarene permit discovered a major new gas condensate discovery in the Ain Tsila field. Data from the three wells drilled have demonstrated the presence of an extensive and probably continuous gas accumulation capable of flowing at rates exceeding 30mmscf/d following fracture stimulation.

Tunisia

Ksar Hadada permit. (Petroceltic Interest 27.03%, Operator, Partners PetroAsian Energy (Tunisia) Limited ("Petroasian"), 51%, Independent Resources (Ksar Hadada) Limited, 18.97%, GA.I.A srl, 1.5%, and Derwent Resources 1.5%).

In Tunisia, the CTF Rig 06 has reached total depth in the Sidi Toui-4 ("ST-4") exploration well at 1603 meters (along hole measured depth). The ST-4 well was designed and successfully drilled as a deviated well bore through the Upper Ordovician, penetrating 364m of the objective Bir Ben Tartar Formation at an average deviation angle of 77 degrees.

Although oil shows were encountered in the Bir Ben Tartar reservoir unit, evaluation of the extensive logging suite acquired in the Ordovician section indicates that the oil saturation and reservoir fracturation is insufficient at the ST-4 location to justify fracture stimulation and testing of this well bore.

The well will now be plugged and abandoned, without testing, and the CTF Rig 06 will be demobilized.

Both Oryx-1 and Sidi Toui-4 wells form part of the work programme that was agreed when Petroasian farmed into the permit. Petroasian is committed to finance all of the joint venture's work commitments in the current program, including the drilling of these two wells, up to a maximum of US $14.5 million. Petroceltic currently estimates that it will have to make a modest contribution to the overall cost of this two well exploration program, of the order of US $0.27 million.

Brian O'Cathain, Chief Executive commented, "We are pleased to report that plans for the forthcoming appraisal drilling program on Ain Tsila are on schedule. The results of the studies on the field work done to date are extremely encouraging and, through the 2010/11 program, we look forward to confirming additional Gas in place and the likely recoverable reserves.

While the outcome of the ST-4 exploration well is disappointing, the extensive modern logging data collected in this well will now be used to high-grade the remaining prospect inventory for the permit. Petroceltic will review all the data collected from the ST-4 well before making a decision on whether to continue with any further exploration on the Ksar Hadada block."

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