Carpathian Reports on Quarterly Activities

Carpathian Resources Limited on Wednesday issued the report below on its activities during the quarter ending on December 31, 2006.


Janovice Gas Field (60% interest)

Apart from a short shut-in period to conduct a production test, which confirmed previous results, production from the field was maintained throughout the quarter at a rate of about of 34,000 cubic meters per day (1.2 million cubic feet per day). The gas price in the Czech Republic is still remains healthy and the outlook for 2007 is good.

Krasna Oil Field (75% reducing to 50% after payout)

During the quarter the field produced 485 cubic meters (3060 barrels) of fluid with KS4 contributing 274 cubic meters of dry oil (1732 barrels) while the remainder from KS7 was a roughly equal mixture of oil and water.

On 18th December 2006 the field was shut for the winter during which time the data from the long-term test of KS4 will be integrated in to the reservoir model in order to understand better the field and its performance.

Raskovice - Moravka (60%)

Integration of the geophysical and geological interpretations of the permit was completed and a number of exploration tools are under consideration for the next stage, which is to build on the initial seismic reconnaissance grid. It is anticipated that a choice of exploration strategy will be made in the early part of 2007.

Mosnov, 90% interest (contributing 100%)

As previously announced the Mo-1 Skotnice well was spudded on November 28th 2006 at a location between the depleted Kremlin gas field to the north and the Priobor-Klokocov Field to the south. It is reported that the latter produced 23 billion cubic feet of gas between 1945 and 1984 at rates of up to 5 million cubic feet per day. The Skotnice prospect was defined by 28 coal exploration holes, 0.5 - 1 kilometer apart and the target was Tertiary sandstones in a potential trap at a depth of about 400 meters and sandstones within the Carboniferous section not far beneath. The location is very close to and updip of a coal exploration hole from which a gas flow of 80,000 cubic meters (approximately 2.8 million cubic feet per day) was recorded in 1961, some two years after it had been drilled.

The well reached the final total depth of 430m on December 8th 2006 and although only minor shows of gas were recorded while drilling, the analysis of the wireline logs indicated the presence of a 3.2m gas column in a good quality Miocene sandstone reservoir with up to 17% porosity. Measurements of plugs from the core in the Miocene Karpat reservoir indicate porosities in the range 12- 25% and permeabilities of 600 - 2 300 millidarcies, yet no flow was measured when the section was tested and this remains the case. It is not clear why such a reservoir failed to produce a flow. It may be due to damage to the formation while drilling and/or while cementing the production string; it may also be due to inadequate perforating. The operator is preparing a program of remedial steps to resolve the problem.

Morava, 90% interest (contributing 100%)

The Morava project is located near Hodonin in the northern part of the Vienna Basin, a prolific oil and gas producer. Hodonin is the regional center for oil and gas production.

Two potential hydrocarbon prospects have been identified. The first is Neogene in age and is an extension of the Vienna Basin from which oil and gas is produced. The target is principally oil. The second trap is in the flysch sequence of the Magura Nappe. It is deeper, larger in size, is higher in risk and is more likely to contain gas.

The prospects are now the subject of an independent review, which should be completed early in the first quarter 2007.

Roznov, 90% interest (contributing 100%)

The permits cover an area of prospective sediments in a variety of potential traps on a faulted margin. The most exciting are a series of features on the basin slope.

Differences between local and regional planning requirements, highlighted by the feasibility study carried out early in 2006 are not yet resolved and have delayed progress in the area where the largest features are located. The operator is developing a new strategy to accomplish this and in the meantime the focus has shifted to a smaller prospect which is the subject of an independent review. Provided the review is positive and the location is supported by the result of a feasibility study a decision to drill the target could be made in the first half of 2008.