Equator Completes Testing at B-DX1 Well Offshore Nigeria

Peak Petroleum Industries Nigeria Ltd. and Equator Exploration Ltd. have completed operations with successful production flow tests on the "B-DX1" well, located on OML 122, offshore Nigeria.

The OML 122 license area 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 218 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.

Extensive production flow testing of a selected perforated interval (2314-24 meters sub-sea) in the main gas reservoir is now complete. After a clean-up period and a multi-flow test, the well was flowed for 12 hours on a 56/64" choke. A stabilised rate of 26.5 mmscf/d was achieved with a well head flowing pressure of 1682 psig. The condensate-to-gas ratio was 18.0 stb/mmscf and the field measurements of gas gravity and condensate gravity were 0.615 and 51.8 degrees API respectively. The final bs&w was 3.0%.

As previously reported, the oil reservoir below this gas zone has been tested from selected perforated intervals (2400-03, 2407-09 meters sub-sea) at a rate of 7,188 bopd on 64/64" choke. The well head flowing pressure was 721 psig, the gas-oil ratio was 663 scf/bbl and the field measurement of oil gravity was 38.8 degrees API. There was no water or sand production other than a trace of fine particles.

Subject to further drilling, the independent technical advisers to Equator, Horizon Energy Partners BV ("Horizon"), estimate the oil-in-place to be 130 million barrels. They estimate the total gas-in-place in the zones that could be evaluated to be 900 billion standard cubic feet, not including the deep gas zone penetrated but not evaluated because of its high pressure. Production testing and wireline logging information indicate that all of the reservoir horizons, which are located in the paralic sequence in the Agbada Formation, have excellent properties.

Peak and Equator continue engineering work on a scheme for the immediate development of the oil reservoir based on sub-sea horizontal wells and a floating processing, storage and offloading 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 B-DX1 well has been suspended for later oil production service and the rig is now being moved 18 miles to the south to the second location in the OML 122 drilling campaign. In the next few days it will spud Owanare AX1 on the large and promising Owanare prospect, which lies in a water depth of 135 meters. The 3D seismic data covering the prospect has been re-processed and interpreted by Peak, Equator and its independent technical advisors, Horizon, indicating that Owanare has undiscovered gas-in-place in excess of 3 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. A 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 results of B-DX1, Wade Cherwayko, Chief Executive Officer of Equator, said:
"The production tests have proved the quality of the oil and all of the gas reservoirs in the B-DX1 discovery. We can expect very productive development wells. We press on with the early development of the oil reservoir and the monetisation of the gas reservoirs, while looking forward to the exploration of the first class Owanare prospect"

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