Equator Begins Drilling Operations Offshore Nigeria

Peak Petroleum Industries Nigeria Ltd. and Equator Exploration have commenced drilling their first well in the OML 122 license area, offshore Nigeria.

OML 122 is located 25-60 km offshore in water depths of 40-300 meters and covers an area of 1,295 sq. km on the Western Niger Delta, east of Shell's giant Bonga Field (estimated 1.4 billion barrels) on OML 118 and southwest of Shell's EA Field on OML 79.

OML 122 has two suspended oil and gas discoveries that were drilled in the 1970s. The well currently being drilled by Peak/Equator, the B-1 DX well ('B-1 DX'), is an exploratory-appraisal well on the field discovered by the B1 well ('B-1') drilled by Deminex Oil in the 1970's. The B-1 well tested an oil zone and encountered several gas zones, which recently reprocessed 3D seismic suggests are of significant size. The current well will test further up-dip, deeper sands that were water-bearing in the original B-1 well. It is planned to be drilled to a target depth of 3,100 meters over a 35 day period by the Bulford Dolphin semisub. This will be the first of two wells to be drilled by Peak and Equator on OML 122 over the next three months. All target intervals will be logged with complete logging suites and flow tested.

A second exploration well planned for January 2006 will test a promising, large structure south of the B-1 DX well in a water depth of 135 meters. This structure is covered by 3D seismic data acquired in 1999 and recently re- rocessed and interpreted by Peak, Equator and their technical advisors. The Owanare prospect has estimated potential hydrocarbon volumes of over 1.5 TCF.

The aim of the initial two wells being drilled by Peak/Equator is to prove-up significant volumes of gas as potential supply for the numerous gas-utilisation projects currently underway or in planning stages in Nigeria within close proximity to OML 122. The secondary objective is to find commercial volumes of oil on the block.

Commenting on the spudding of the first well on OML 122, Wade Cherwayko, Chief Executive of Equator, said:

'Both Peak and Equator are pleased with the rapid progress made in the evaluation and appraisal of this high potential block considering the joint venture agreement was only signed in April 2005. The B-1 DX exploratory-appraisal well is aimed to prove significant volumes of gas and additionally targets a potentially larger pay zone in an oil reservoir that previously tested high quality crude oil at significant flow rates in the B-1 well. We are optimistic about the prospects for success given the largely appraisal nature of this first well.

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