Melrose to P&A Samotino No. 2 Well Offshore Bulgaria

Melrose Resources reports the results of recent drilling activity in Bulgaria and Egypt.

In Bulgaria the Samotino No.2 exploration well on Block Kaliakra 99 was spudded on November 16, 2005 and drilled to a depth of 6,760 ft. The well encountered good gas and live oil shows while drilling in the Eocene section with hydrocarbon saturations over 50% recorded. While a 16 ft gas interval was identified, this was not considered worth testing and the well will be plugged and abandoned. The area will be remapped using the data obtained with emphasis on the up-dip section of the channel as the well appears to have been drilled through a transition zone.

The results of the Samotino No.1 and No.2 wells confirm the presence of a very active hydrocarbon system (both oil and gas) in the area together with good reservoir sections in the target intervals. Some work has already been done on the Samotino No.1 well data and there appears to be a strong probability that there is a good trap up-dip to the west where the Oligocene channel sequence pinches out. The location is in the shallow waters on our Kaliakra 99 Concession close to the coast but is not currently covered by 3-D seismic. The data from both wells will be reviewed further over the coming months and the results incorporated in a re-interpretation of the seismic in this area.

In Egypt, the West Khilala No.1 exploration well was drilled to a depth of 11,250 ft. The logs over the Abu Madi interval indicated a gross gas filled interval from 9,924 ft to 10,046 ft with no water contact and with the main clean sand interval from 9,951 to 10,046 ft. Swelling shales around 10,550 ft prevented wireline logging below this depth and caused some operational delays cementing the casing. Three separate intervals totalling 43 ft were perforated and the well was flowed at several rates over a 24 hour period. The final stabilised rate was 30.2 MMcfpd on a 40/64ths choke with a well-head flowing pressure of 3,238 psi. The location of an initial appraisal well on the West Khilala structure has now been confirmed and will be drilled using the same PD-104 rig.

The South Batra No.22 appraisal well was drilled to a depth of 10,200 ft using the EDC-09 rig. The Abu Madi Level III target was encountered slightly low to prognosis with approximately 40 ft of gross reservoir section above the water contact. The existing South Batra No.7 well will adequately drain gas reserves in this section of the reservoir. An extensive section of unconventional reservoir, with very high background gas levels during drilling, was encountered through the interval 8,200 to 8500 ft. The potential to stimulate this type of reservoir has been studied with a specialist service company and a test procedure is being developed. A production string was set in the borehole to facilitate the proposed rigless well stimulation operation early in 2006. The rig has been moved to drill the South Batra No. 24 development well with the Abu Madi Level II as the target producing horizon.

The Turbay No.1 exploration well, targeting the El Tamad oil play, was drilled to a depth of 8,030 ft. using the ECDC-1 rig. A Sidi Salim reservoir sand unit was encountered on the flank of the target structure from 6,228 to 6,476 ft gross with an oil column from 6,426 to 6,438 ft. As a result, the well was plugged back to 4,120 ft and side-tracked up-dip. The sidetrack encountered the top reservoir section at 6,396 ft (30ft above the Turbay No. 1 well) with initial wireline logs indicating an overall hydrocarbon column of 42ft. Wireline logging is continuing in this well in order to fully evaluate the section and the well is expected to be tested within the next two weeks.

Commenting on this, Robert Adair, Chairman, said:
'The results of the two exploration wells we have drilled in Bulgaria are encouraging for the prospectivity of our large acreage position there in that we have clear evidence of an active hydrocarbon system, including oil, and good reservoir sands. While we have not yet had commercial success, the two exploration wells just drilled have provided us with some very positive results. Next year we will also look to target the most prospective targets in the deeper waters of the shelf margin identified on 3-D seismic. Although the drilling costs will be higher, the technical risk associated with these wells is lower and reserve potential higher than the shallow shelf wells.

In Egypt, the West Khilala discovery presents us with an interesting extension of the Abu Madi Channel system in the northwest of the Concession and the excellent test rate confirms the good reservoir quality. A further well location has been identified on the structure and potential in deeper horizons will also be evaluated. I believe that reserves here could be up to 200 Bcf per structure. Other structures in the area are being fast-tracked for drilling. The South Batra No.22 confirmed the extension of the Abu Madi Channel to the south of the existing No.7 producer but the real interest lies in the unconventional Pliocene interval which should be tested early next year. If the proposed well stimulation technique works, we will add a significant new Pliocene play and further reserves, some of which are already behind-pipe.

The West Khilala field, which is our second largest discovery to date on the El Mansoura Concession, and the confirmation of the Tamad oil trend in the Turbay discovery are further indications of the very substantial exploration potential which remains on our Egyptian Concessions.'

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