Equator Exploration Says B-1 DX Well Encounters Gas Shows

Peak Petroleum Industries Nigeria Ltd. and Equator Exploration provide an update on drilling activities on the 'B-1 DX' well located on 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 1970's. The B-1 DX well, is an exploratory-appraisal well on the field discovered by the 'B-1' well drilled by Deminex Oil. The B-1 well tested an oil zone and encountered several gas zones, which recently reprocessed 3D seismic suggests are of significant size.

The well is currently drilling ahead at a depth of 1583 meters below sea level, utilizing real time logging while drilling. It has already encountered gas zones in the upper section which can be correlated with the original B-1 well. Logging data on the B-1 DX well indicates that the well is in a structurally 'up-dip' higher position than the B-1 well. Within the next seven to ten days, it is anticipated that the B-1 DX well will be penetrating an upper gas sand, the main gas sand, the oil sand and the lower gas sand, all of which were encountered by the B-1 well, The well will then drill into deeper potential gas bearing sands that were water-bearing in the original B-1 well due to its structurally low position. Testing operations will commence as soon as the well has reached total depth, planned at 3,550 meters below sea level. It is anticipated that tests will be conducted on three of the gas sands and the oil sand. Equator is funding the cost of two wells in the field to earn a 40% working interest in the field area.

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

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-utilization 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 and condensate on the block.

Commenting on the B-1 DX well, Wade Cherwayko, Chief Executive of Equator, said:

'Both Peak and Equator are pleased with the progress made on the B-1 DX well. We are also encouraged by the logging data we have received to date which indicates that the B-1 DX well is structurally higher then the original B-1 well.'

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