Hycarbex-American Energy Plugs Well on Yasin Block in Pakistan

Hycarbex-American Energy announced the results of its Al Ali #1 Well and its planned exploration and production activities, on the Republic of Pakistan Yasin Block (2768-7) comprising 842 square miles (2,182 square kilometers). The American Energy Group, Ltd. owns an 18% gross royalty in the Concession. The working interest is co-owned by Hycarbex (85%), Techno Petroleum (Pvt) Limited (10%) and Government Holdings (Pvt) Limited (5%).

The drilling of Al-Ali #1 Well as an exploratory well was undertaken to fulfill the work obligations for the third contract year under the Concession License. The primary objective of the well was to penetrate the Sui Main Limestone from which several commercial gas discoveries have been made adjacent to the Yasin Block and from which Hycarbex's Haseeb #1 Well drilled in 2005 is also expected to produce commercial quantities of gas when it is connected to the area pipeline. The connection to the production pipeline is expected to occur in the next few months.

According to Hycarbex's technical staff, drilling confirmed the vertical closure of 20m in the Sui Main Limestone. While gas shows were encountered during drilling, the gas volumes, on preliminary analysis, did not appear to be commercially viable. The well has been temporarily closed according to industry practices by placing plugs and releasing the rig. The drilling data is being studied by Hycarbex, together with a review of the logging data by Schlumberger Oilfield Services, in order to determine if further operations would likely yield commercial volumes of gas.

Hycarbex further announced its planned exploration and production activities on the Yasin Block. These activities include recently obtained 95 Lkm of 2D seismic data through M/s Geofizyka - a Polish seismic data acquisition and interpretation contractor. Currently, the obtained data is under processing and interpretation.

Hycarbex has also formulated an appraisal plan for the Haseeb No. 1 Well. Under the proposed plan, Hycarbex intends to perform an extended well test by installing preliminary gas production facilities and producing into the area pipeline. Sui Northern Gas Pipeline, Ltd., one of the largest gas transmission and distribution companies in Pakistan, has indicated its willingness to purchase the daily gas volumes produced from the extended well test. Hycarbex plans to award the contract for construction of surface gas production and processing facilities during the third week in September. These facilities are expected to provide processing capabilities, where needed, for gas and condensate produced from area wells drilled on the Yasin Block. Finally, the appraisal plan also includes the near-term selection of a drillsite and the drilling of an appraisal well per the terms of the Concession License in the next several months.