Melrose Makes Discovery with Aga No. 1 Well in Egypt

Melrose Resources says the Aga No.1 exploration well, which is situated in the South Mansoura Development Lease located to the south of the South Batra field, was drilled to test both the Pliocene Kafr El Sheikh and the Miocene Abu Madi formations. The well was spudded on April 12, 2004 and reached a total measured depth of 9,525 ft in the Late Miocene Qawasim formation on the May 19, 2004. A 32 ft section of Kafr El Sheikh reservoir was perforated and tested at a stabilized rate of 9.3 MMcf of gas with 19 barrels of 51.3 degrees API gravity condensate per day on a 30/64 inch choke over a 24 hour period. The average well head pressure was 1,731 psi. The well is currently shut in and will be produced via the South Mansoura field facilities following completion of the field flowline. The Miocene Abu Madi reservoir was encountered but was water wet and was not tested. As a secondary target in this well the Pliocene reserves are expected to be relatively modest, around 5 Bcf, but this well bore appears to have encountered part of a Pliocene channel system where other bright spot culminations appear much larger and are stand alone prospects.

The South Batra No.14 appraisal well was spudded on the June 17, 2004 and reached a total measured depth of 10,400 ft also in the Late Miocene Qawasim formation. The whole Abu Madi section was cored successfully and a 158 ft gross Level III interval was identified. A 56 ft net interval was perforated and the completion was run in early July. The well was flow tested directly to the South Batra production facilities and is currently producing 9.7 MMcf and 150 barrels of condensate per day at a well head pressure of 2,800 psi. The rate is expected to increase further as the optimum production rate is established.

Two drilling units are currently operating on the South Batra field. The South Batra No.4 appraisal well, which was spudded on the July 17th and the South Batra No.15 appraisal well which was spudded on the July 28th, are both currently drilling. These wells will also evaluate the potential of the shallower Kafr El Sheikh formation. 720 km(2) of 3-D seismic has already been acquired over the concession and an additional 500 km(2) 3-D survey is currently being acquired over the western part of the concession

Melrose holds a 50% interest in the El Mansoura Concession through its wholly-owned subsidiary, Odyssey Petroleum (El Mansoura) Limited and a 46% interest in the Qantara Concession through its wholly-owned subsidiary, Odyssey Petroleum (Qantara) Limited.

Robert Adair, Chairman, said: 'Our current focus in Egypt is the development of the South Batra field with target gross production of 100 MMcfd by January 2005. A third, smaller drilling rig is expected to arrive shortly to drill the Qantara No.9 exploration well on our Qantara Concession. The rig will then move to the El Mansoura Concession where we plan to drill a number of Pliocene exploration prospects in the area of the Aga discovery over the coming months.'