Avenue Energy Plans More Exploration in Turkey

Avenue Energy has notified Aladdin Middle East Ltd (AME), the operator of the Karakilise oil field and the Karakilise Licenses, that pursuant to its Participation Agreement with AME, Avenue will maintain a 50% interest in the drilling of the Karakilise-2 oil appraisal well. The well is scheduled to commence drilling by the middle of March 2004.

Since commencing production in mid-September 2003, the Karakilise-1 well has produced approximately 26,000 barrels of good quality light crude (32.5 degrees API). An engineering study is being undertaken to optimize production from this well.

Avenue's 50% share of the turnkey drilling costs of the Karakilise-2 well will be approximately US$1.5 million of which 50% is due in February 2004, with the balance payable upon AME reaching certain drilling objectives in the well together with a 50% share of completion costs in the event of the well being completed as a further producer on the field.

Commenting on the latest developments, Avenue's Director of Exploration, Dr. Jaap Poll said:

"Avenue is pleased with the developments thus far at the Karakilise License. Recent laboratory analyses of the light sweet crude produced at Karakilise-1, indicates a likely Silurian source for the oil, implying that vertical migration of oil into the younger Cretaceous fractured limestone reservoir is a distinct possibility. Reservoir sections in Lower Mesozoic and Palaeozoic sequences overlying the Silurian source rock may have been charged by this vertically migrating oil. This augurs well for the possible development of multiple productive horizons in the Karakilise structure and indeed in similar untested structures in the Karakilise and nearby Licenses in which Avenue currently holds a 50% interest in this portion of SE Turkey.

The fractured limestone reservoir at Karakilise is typical of the productive Cretaceous oil reservoirs in the region and since the Karakilise-1 well penetrated only the top section of the oil zone in the uppermost Mardin Formation, information on the actual thickness of the Mardin oil column and true production capabilities of this reservoir section are not currently available.

The next step in the exploration and appraisal program will therefore be to drill further into the Mardin section in the Karakilise-2 well. Thereafter deeper drilling will be required to investigate the possibility of multiple pay zones in the Lower Cretaceous and Palaeozoic sections."

Dr. Poll concluded by stating: "Based upon the favorable results thus far at the Karakilise License, Avenue intends to actively pursue its strategy of aggressively exploring for oil in this politically secure portion of the Arabian Basin."

Technical Overview

Turkey straddles the oil-rich Middle East and the energy hungry European Union (EU). The South-East Turkey region forms the north flank of the Arabian Basin, and lies adjacent to the major oilfield belt of Iraq, Iran and Syria. Only approximately 1,400 exploration and appraisal wells have been drilled in the whole of Turkey since 1961. The Turkish portion of the Arabian Basin is less explored with fewer wells per acre drilled than in the rest of the Arabian Basin with a great number of play-types and prospects untested.

Avenue engages in oil and gas exploration and development. It has a 50% participation interest in the Karakilise Licenses in the Diyarbakir Petroleum District of southeast Turkey, which has been producing high grade light crude oil since September, 2003 from the Karakilise-1 well. Avenue now holds a 50% interest in 30 petroleum licenses and leases, which constitutes one of the largest non-government owned petroleum exploration and production acreage spreads in Turkey.

Avenue's Arabian Basin licenses and leases are located in a fairway of producing oilfields in SE Turkey (including Turkey's largest oilfield, the Bati Raman Field) and the producing oilfields of north eastern Syria and north western Iraq.