BG Kicks Off Drilling at N. Sea Esperanza Prospect

Canadian Overseas Petroleum Ltd. (COPL) announced that operations at its Esperanza prospect located in Block 22/15 of the UK central North Sea have been initiated. The Ocean Nomad semisub is on location and currently waiting for weather to pass for the commencement of drilling operations.

The Esperanza 22/15-D well is the first well drilled by the Company under its UK North Sea Joint Venture with BG Group (BG). COPL has an agreement whereby the Company will acquire a right to purchase a 50% equity interest in the entire block, including the Banks
discovery, by paying an amount equal to 75% of the costs to drill the Esperanza well. Within 120 days of rig release from the Esperanza well, COPL may exercise such right upon paying an additional US $15 million. BG is the operator of the block.

With the 22/15-D well COPL is targeting light oil in the Paleocene Forties sand. The well is located on a strong, far-offset amplitude (AVO) anomaly at the northwest end of an 11 km long turbidite channel AVO anomaly that includes the Banks discovery to the southeast. BG
discovered the Banks oil accumulation in 2005, which tested 39° oil at 1,080 bbls/d and gas at 12.5 MMcf/d from perforations across the gas/oil contact.

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