Melrose to Abandon Varna West Well

Melrose Resources reports that the Varna West exploration well, drilled within Block 91-III offshore Bulgaria, has been plugged and abandoned as a dry hole. Melrose has 100% ownership of the License.

The well was drilled to the top of the Cretaceous Venchan/Russe formation to a total depth of 1,032 meters. The main Kalaika reservoir section was encountered between 940 - 958 meters, but was low porosity and permeability.

Consideration is now being given to extending the 3-D seismic survey, currently being acquired in the area immediately to the south of Varna West, to cover the Varna East prospect in order to give a direct comparison with the Galata structure before an exploration well is drilled on this structure. The 3-D survey is progressing well and is 60% complete. Early test lines are indicating excellent data quality and confirmation of the extensive channel systems in the area of the survey. The survey should be complete before the end of October and interpretable data will be available by early December.

The rig will now move to the Yuri Shimanov well location in the northern area of Block 91-III.

Commenting on this, Robert Adair, Chairman, said:

'The Varna West result is a disappointment but does not condemn the prospectivity of the remaining Galata Trend exploration prospects. We will continue as planned with the Yuri Shimanov exploration well in the northern area of Block 91-III and it is now likely that we will extend the 3-D seismic survey to cover Varna East before further exploration drilling in the south. We are delighted by the excellent early results from the 3-D survey and we remain on schedule to drill an exploration well on a channel system prospect by late second quarter 2005.'