Well Confirms Significant Extension of Montrose Field

Paladin announces the completion of the drilling of well 22/17-2, its first operated well in the UK sector of the North Sea, using GlobalSantaFe's semisub, GSF Rig 140.

The well has proved up a significant extension of the Montrose Field to the northwest and has successfully achieved all of its objectives. A complete Forties Sandstone interval some 400 ft thick was encountered. The top of this reservoir section was 23 ft high to prognosis at 8,254 ft subsea and reservoir quality was as anticipated with a net:gross ratio of ca. 80 per cent and average porosity of ca. 21 per cent. Preliminary analysis of log and pressure data from the well indicates good pressure communication with the nearest Montrose Field well ca. 1.8 km to the south, and that the oil-water contact at the well location is at the deepest level previously observed in the field. The detailed well results will now be fully integrated into the existing reservoir engineering models to quantify the impact on the field's reserves and to establish the optimum way of developing this field extension.

The well, which was engineered as a 'finder' well, has been plugged and abandoned as planned and the GSF Rig 140 is now preparing to drill the Brechin exploration prospect in Block 22/23, 3.5 km to the east of the Arkwright Field.

The Company is also pleased to announce that it has entered into a Letter of Intent with Prosafe Drilling Services UK Ltd. to install a modular drilling rig on the Montrose platform with a view to commencing a multi-well infill and stepout drilling program by year end; this will be some six months earlier than originally anticipated when Paladin assumed operatorship of the field in May 2003.

Joint-venture partners in the Montrose Field and well 22/17-2 are Paladin Expro Limited (58.97436 percent), a wholly owned subsidiary of Paladin, and Energy North Sea Limited (41.02564 percent).

Roy Franklin, Chief Executive of Paladin, commented:

'This is an excellent well result for the joint-venture confirming a significant extension of the Montrose Field to the northwest of the existing producing area, particularly when taken in combination with our plans to accelerate the field's redevelopment.'