Vintage Petroleum Finds Oil with An Nagyah #5 in Yemen

Vintage Petroleum reports that the An Nagyah #5 well in the Republic of Yemen has tested light (44 degree API) oil from the sub-salt Upper Lam formation. The well, a western extension and the third appraisal well to the An Nagyah #2 discovery well in 2002, was drilled to continue the evaluation of the sub-salt Lam formation.

The An Nagyah #5 well was drilled to a total depth of 4,265 feet (1,300 meters). Electric log analysis indicates a gross interval of 46 feet (14 meters) that is oil bearing in this well. A 23 foot (7 meter) interval in the Upper Lam formation was perforated between 3,455 and 3,478 feet (1,053 to 1,060 meters) and tested at a stabilized flow rate of 1,150 barrels of light, water-free oil and 440 thousand cubic feet of natural gas per day with a flowing tubing pressure of 300 pounds per square inch. The Upper Lam interval tested in the An Nagyah #5 correlates to the interval in the An Nagyah #2 discovery well, which tested 1,091 barrels of oil per day and to the An Nagyah #4, that tested 1,320 barrels of oil per day in 2003.

"We are encouraged by the results of the An Nagyah #5 which indicates the continuity of the Upper Lam sands and extends the productive area of the An Nagyah structure to the west, supporting the potential for additional reserves and production," said Charles C. Stephenson, Jr., CEO. "We are particularly pleased with the diligence and cooperation exhibited between the government of Yemen and our employees, that expedited this project, moving from approval of commerciality to first production in approximately six months," added Mr. Stephenson.

With testing completed at the An Nagyah #5 well, the rig is being moved to a location between the An Nagyah #2 and #4 wells in order to drill the An Nagyah #6 appraisal well. Concurrently, preparation of the location of the An Nagyah #7 well is underway. The objective of the #7 well is to delineate the extension of the An Nagyah structure to the west of the #5 well. Approximately $10 million of Vintage's total non-acquisition budget of $225 million is allocated to the drilling of seven wells in Yemen during 2004. Included in this total is an allocation of $1 million for the drilling of an appraisal well near the company's Harmel discovery to improve understanding of the productive formations and aid in determining the aerial extent of those formations. Vintage is the operator and has a 75 percent working interest in the 285,000 acre Commercial Development area within the S-1 Damis block.

Field production operations were begun this week with the An Nagyah #4 well placed on production. With the addition of the An Nagyah #5 well, combined daily oil production is anticipated to grow to approximately 2,500 barrels gross (1,300 net) during the second quarter 2004. Initially oil production is to be trucked 18 miles to a nearby pipeline facility for transportation to an export terminal until the permanent pipeline is completed next year. Vintage will spend approximately $17 million during 2004 for design and construction of a pipeline and processing facility at An Nagyah, anticipated to be completed in the second quarter of 2005, to permit the production of greater volumes and streamline transportation. The processing facility is being designed to process 10,000 gross (net 5,200) barrels of oil per day, with the potential to expand as additional capacity is warranted.