Melrose Continues High Success Rate in Egypt

The Al Rawda exploration well was the first well drilled in the SE El Mansoura Concession. The well was drilled to target a Sidi Salim prospect to the southwest of the El Tamad discovery using the ECDC-1 rig. The target interval was encountered between 5,866 ft and 5,910 ft and was gas filled. This is believed to be the gas cap overlying an oil column down-dip. A 31 ft interval was perforated and the well was flowed at 10.9 MMcfpd and 55 bcpd on a 28/64ths choke with a flowing well head pressure of 2,223 psi. The well will be put on production, tied in through the existing Sinfas facilities, as a gas producer.

The rig was then moved to the South Tunbarah location which lies between El Tamad and Al Rawda on the same Sidi Salim trend. The top target interval was encountered at 6,100 ft and encountered good hydrocarbon shows but was water wet. The well was abandoned. The ECDC-1 rig was then moved to the Sinfas well which was originally completed in and produced from a zone at 4,970 ft to 4,982 ft. This lower interval was plugged and the best interval in the well from 3,780 ft to 3,810 ft was tested through 10 ft of perforations. The well flowed at 6.33 MMcfpd of dry gas on a 24/64ths choke with a flowing well head pressure of 1,492 psi. The well will be produced through the existing facilities.

The Salaka exploration well was spudded on February 8th using the PD-104 rig. This prospect lies on the southern extension of the Miocene channel system on the west side of the South Batra Field. Good hydrocarbon shows were encountered in three Miocene reservoir intervals (Abu Madi and Qawasim) between 8,700 ft and 9,700 ft. The wireline logs indicated that the upper interval from 8,720 ft to 8,880 ft, which had good hydrocarbon shows while drilling, is water wet. It is likely that this interval could be productive in an updip location which has a strong seismic anomaly. The middle interval from 9,140 to 9,214 was tested at 9.0 MMcfpd and 105 bcpd on a 24/64ths choke with a flowing wellhead pressure of 1,846 psi. The lower interval between 9,437 ft and 9,632 ft was tested at 8.5 MMcfpd and 165 bcpd on a 24/64ths choke with a flowing well head pressure of 2,404 psi. The structures are being re-mapped and an appraisal location being worked up in order to test the full reserve potential of the Miocene in the Salaka area. A small Pliocene target was also confirmed through a 26 ft gas interval with potential of 4 Bcf of reserves. The rig is currently moving to the Khilala No.2 appraisal well location.

The EDC-9 rig is currently drilling the NE Mit Dafir exploration well targeting a higher risk Miocene channel prospect on the eastern side of the El Mansoura Concession.

Commenting on these developments, Robert Adair, Chairman, said:

"We continue to maintain a high rate of drilling success in Egypt. The Salaka well result is particularly important as it is in effect a South Batra extension. This supports our view that the South Batra field has considerable upside in the channels we have identified to the north and south of the established field area. Further prospects on other extensions to the South Batra channel system have been upgraded following this success.

"The first well to appraise our West Khilala discovery will spud shortly. If successful, this well could justify a significant increase in reserves. Following the NE Mit Dafir well, we will drill the first of two planned Abu Khadra wells. Abu Khadra is an exciting Abu Madi Level II prospect, analogous to Khilala. We will also drill the first well to appraise our West Dikirnis discovery.

"In anticipation of the completion of the processing of the new 3-D seismic, which will be shortly available, covering the eastern side of the El Mansoura Concession, a full review of all our data will occur to assess the deeper prospectivity of the licenses. While this review is underway, our drilling campaign will continue with two rigs on the targets already identified which allows for one of the deep rigs to be loaned to another operator for six months. Full rig utilisation is planned to resume later in the year."