Reach Exploration Awarded 16 Blocks In UK Licensing Round

Reach Exploration has been offered 16 Blocks with a total area of approximately 2400 square kilometers. These awards see Reach committing to a 5 well drilling program over the next few years. This is in addition to the 3 wells that Reach will be drilling later in 2005.

These 16 blocks lie within three geographic areas. In the Inner Moray Firth, 8 blocks have been awarded to a Joint Venture operated by Petro-Canada UK Limited. Over the next few years the Joint Venture plans to acquire 3d seismic data and drill 4 exploration wells. Reach has 10% equity in these blocks. Reach was also awarded block 12/30 on a Promote License.

In the coastal area of the Inner Moray Firth, between the producing Beatrice Field and the coast, Reach has continued its strategy of acquiring proven and high potential acreage with the award of 6 blocks. In 2004 in the 12th Onshore Licensing Round Reach acquired a License, PEDL 158, situated along the Moray Firth coast, with the intention of drilling offshore targets by extended reach drilling from land-based rigs. Extended reach drilling technologies are used in environmentally sensitive areas where the impact on the environment can be minimised by locating surface facilities up to 11 kilometers from the target locations. The 6 blocks Reach and partner Caithness Petroleum, have been awarded are immediately offshore to PEDL158 and are centred on Block 11/24 on which there are two oil discoveries. Well 11/24-1, drilled in 1996, flowed 36°API oil at a maximum rate of 2040 bopd from the Beatrice Formation. This field lies 3.5 km from the coast. Wells 11/24-2 and 2Z, drilled in the year 2000, encountered hydrocarbons in the Beatrice Formation and overlying Brora Sand. This field lies approximately 8 km offshore. The Joint venture intends to produce these two oilfields from onshore locations by extended reach drilling. Reach will operate the joint venture with 70% equity.

Reach was also awarded block 16/3d in the South Viking Graben adjacent to the producing Brae trend of fields. This block contains a proven oil accumulation, drilled by well 16/3a-4, which tested light oil from the Brae Formation at 1583 bopd. There is also a significant exploration prospect. This block was released for incorporation in the 23rd Round as a result of the DTI fallow process.