Melrose Resources Brings Two El Tamad Wells On Stream

Melrose Resources says that the El Tamad Nos.1 and 2 wells were brought on line on Monday, February 7th. The combined production rate for the first full day of production was 850 bopd and 0.6 MMcfpd with a wellhead flowing pressure of 1,010 psi. As the wells have sett led down the rate has increased to 945 bopd and 0.65 MMcfpd and the pressure has increased to 1,040 psi. The wells will be observed closely over the next month and the plan is to increase the combined production rate gradually to a target of 1,500 bopd over the next few months. The Turbay No.1 well will also be brought on line and tied back to the El Tamad production facilities, the flowline from Turbay to El Tamad having already been completed. It is estimated that the initial flow rate from Turbay will be around 150 bopd plus 1.0 MMcfpd but over time it is expected that the oil rate will gradually increase and the gas rate will reduce.

The Tummay No.1 exploration well was drilled by the ECDC-1 rig to a depth of 6,835 feet targeting both the Sidi Salim and Pliocene objectives. The Sidi Salim interval had good oil shows while drilling the zone of interest but wireline logs indicated that the oil is residual. In the Pliocene horizon, a 39 foot gross gas bearing interval was encountered at 3,413 feet. The interval was tested at 4.6 MMcfpd of dry gas on a 28/64th choke following gravel pack and will be put on production in due course. Reserves for this typical Pliocene channel feature are expected to be around 10 Bcf.

The North Aga exploration well was drilled by the PD-104 rig to a depth of 9,025 feet to test an Abu Madi seismic anomaly. The well encountered a shaley channel sequence with non-commercial gas shows. The Biyala No.1 exploration well was drilled by the EDC-9 well to a depth of 10,471 feet and wireline logging operations are currently nearing completion. The well was drilled to test a strong seismic anomaly below the Abu Madi level. A significant increase in background gas was encountered at the top of the feature but initial log evaluation indicates that the interval is water wet. It is expected that the well will be plugged and abandoned.

The ECDC-1 rig is now drilling the Al Rawda No.1 well on a Sidi Salim oil prospect which is on the continuation of the El Tamad trend into the Southeast El Mansoura Concession. This will be the first well drilled in the new concession area. The PD-104 rig has now spudded the Salaka No.1 well which has targets at the Pliocene and Abu Madi levels. Reserve potential is of the order of 50 Bcf but the risk level is low and the location is close to the South Mansoura gas plant.

Following the current wells, the priority will be development drilling in the West Khilala and West Dikirnis areas in order to build production by mid-year. The Abu Khadra prospect in the northwest of the concession will also be drilled. This is an Abu Madi Level II prospect analogous to, and potentially larger than, West Khilala. Other similar AVO based prospects have been identified in this area.

Further detailed analysis of the West Khilala well test data is indicating potential proved plus probable reserves of 350 Bcf with GIIP of 500 Bcf. As the reserves have the potential to be much larger than originally expected, the development plan has been revised and the building of a gas process plant at the Khilala No.1 well location is now proposed. A third Khilala development well is also now planned. The West Dikirnis field will be produced through a new pipeline being built to the South Batra gas plant via the South Batra No.21 production site, which has spare gas/condensate process capacity.

The 3-D seismic crew has now completed the acquisition program over most of the El Mansoura Concession. The crew has recently moved on to the South East El Mansoura Concession and acquisition over the northwestern part of this concession should be completed by April.

Commenting on this, Robert Adair, Chairman, said:
'While the results of the North Aga and Biyala wells are disappointing, these were much higher-risk than most of the prospects we have been drilling. We will continue to fit these higher-risk, high return prospects into our program. There are a number of new play concepts remaining to be tested, particularly in the eastern part of El Mansoura. The potential in some of these plays is likely to be at least as significant as that demonstrated by the West Khilala and West Dikirnis discoveries and we are keen to pursue these new opportunities.

'We are delighted to announce the start of production from the El Tamad area and we hope to tie in the Turbay well to the Tamad facilities soon. While we encountered only non-commercial oil shows in the Sidi Salim in the Tummay well, it is encouraging that oil appears to be migrating into all of the structures which we are mapping in the Tamad area. We are currently acquiring 3-D seismic in the South East El Mansoura Concession and this will help with the mapping of the bigger structures identified on 2-D seismic in this area.

'Overall, I am very pleased to be able to confirm the huge steps forward which we have made in Egypt over the past six months.'