Circle Oil Signs Agreement on Block 49, Oman

Circle Oil has signed the Exploration and Production Sharing Agreement on Block 49, Sultanate of Oman. The agreement was signed yesterday in Muscat by Dr. Mohammed Bin Hamad Bin Saif Al Rumhy, Minister for Oil and Gas, Sultanate of Oman and Mr. Michael J. Keyes, Chief Operating Officer, Circle Oil plc. This agreement outlines the work program for the 6 year license period and also defines the terms for production sharing in the event of a commercial discovery.

Block 49, the Montasar Block, covers an area of over 15,400 square kilometers in southwestern Oman. It lies immediately west of Block 6 which produces approximately 700,000 barrels of oil per day. This concession is operated by Shell and is owned by Petroleum Development Oman, a company whose shareholders are the Government of Oman, Shell, Total and Partex. Block 49 extends north to the Saudi Arabian border where the Rub'Al Khali oil basin is situated.

Block 49 has been awarded to Circle for a six year period with an initial exploration program of 36 months followed by two 18 month extensions. The initial program includes the review of all existing data followed by aeromagnetic/aerogravity and 2D and 3D seismic surveys. Drilling will be carried out in periods 2 and 3 though the timing of this can be advanced depending on the results of the initial surveys.

Circle intends to commence its work program on Block 49 later this year and the Company is currently in talks with strategic and institutional investment groups to fund its ongoing exploration programs on this and other areas.

Circle is also pleased with its progress on its Namibian concession with the China Shine group and will update the market in the near future.