Equator Exploration Says the B-DX1 Well Has Reached TD

Peak Petroleum Industries Nigeria Ltd. and Equator Exploration Ltd. are pleased to announce that the 'B-DX1' well, located on the OML 122 license area, offshore Nigeria, has reached total depth.

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 the giant Bonga Field (estimated 1.4 billion barrels) on OML 212 and southwest of EA Field on OML 79. B-DX1 is an exploratory-appraisal well on one of the discoveries made in OML 122 in the 1970's.

The B-DX1 well has reached total depth at 3545 meters (BRT). High pressure gas has been encountered in an additional and deeper zone than those previously penetrated and announced. Influx of gas has prevented the logging of this zone. As the well was not designed to cope with the high pressures (i.e. > 8000 psi,) this deeper zone has been plugged without testing. However, it has been shown that hydrocarbons do exist in the deeper horizons. The zone will be fully evaluated in a later well, specifically designed to handle the high pressures.

From 3D seismic and wireline logging data, the independent technical advisers of Peak and Equator estimate the total gas-in-place in the sands evaluated as 900 billion cubic feet. With the addition of the high pressure gas zone, it is anticipated that gas-in-place in the discovery will reach the Peak/Equator Joint Operating Team target of 1 TCF. Subject to further drilling, the oil-in-place is preliminarily estimated at 130 million barrels. All the reservoir sands and the crude oil, with a gravity of 40 degrees API, exhibit excellent qualities. Operations continue on the B-DX1 well with extensive production flow testing of the oil rim and of the main gas reservoir.

Peak and Equator continue engineering work on a scheme for developing the oil reservoir based on sub-sea horizontal wells and a floating processing, storage and offtake system (FPSO). Orders for long-lead time equipment are being placed and negotiations for a suitable FPSO continue. Subject to further engineering, reservoir evaluation and drilling, it is anticipated that oil production could commence in the first half of 2007. Equator is funding the cost of two wells in the field to earn a 40% economic interest in the field area.

The second well in the OML 122 drilling campaign will immediately follow the B-DX1 well in mid-March and will explore a promising, large structure south of B-DX1 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. It is a large structure with the potential for 3+ TCF of gas-in-place.

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 and condensate on the block. Additional appraisal and development wells will follow the drilling of the Owanare prospect.

Commenting on the B-DX1 well, Wade Cherwayko, Chief Executive Officer of Equator, said:

'Peak and Equator look forward to the testing of the gas and oil reservoirs that have been established by the B-DX1 appraisal well. Our target figure for gas reserves has been achieved and good progress is being made for a commercial crude oil development, which could be on production in early 2007. We look forward to the spudding our second well on Block OML 122 in mid-March to test the very large (+3 TCF) Owanare exploration prospect.'
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