Black Rock Issues Interim Six-month Results

Black Rock Oil & Gas PLC on Monday announced its interim results for the six months ended December 31, 2006.


--Long-term steam injection testing of the Arce field in Colombia is ongoing.
--Black Rock has committed to drill a heavy oil prospect in Colombia, Acacia Este
--Wintershall Nordzee (the Operator) is currently evaluating development options for the UK Southern Gas Basin Monterey prospect on Block 49/8c (Black Rock's interest: 15%)
--Post period end, Black Rock raised £1.7 million (before expenses) to finance its near-term exploration and working capital requirements
--In January, Black Rock paid Kappa circa $1,000,000 to complete its farm-in obligations on the 249,000 acre Las Quinchas block in the Middle Magdalena Valley of Colombia. Black Rock will be the beneficial owner, subject to Ecopetrol's approval, of 50% of the asset.

Commenting on the results, Dr. John Cubitt, Managing Director, said:

"Following a strategic review of Black Rock's assets, our current focus is on highly prospective plays in the North Sea and Colombia that are close to production and hence cash flow. Following the recent fund raising, we have sufficient working capital in place to meet our near-term commitments. That said, we are looking to diversify our current portfolio with additional assets with considerable exploration upside in the medium term."

Black Rock has exploration acreage in the North Sea and Colombia. In the North Sea, Black Rock has a 15% interest in Blocks 49/8c and 49/9d, operated by Wintershall. The Monterey Field, originally drilled in 1989, was estimated by Carrizo (based on analysis then provided by the field operator, Wintershall Noordzee) to contain 165 billion cubic feet of gas reserves, although no formal resource or reserve has yet been prepared under any of the accepted standards and this figure has not been independently verified by the Company.

The Association Contracts in Colombia are held in conjunction with a joint venture partner, Kappa Resources Colombia Limited ('Kappa'). As announced in April 2005, the Company acquired, subject to certain farm-in obligations and approval by Ecopetrol, a 50 percent, non-operated equity interest from Kappa in the 249,000 acre Las Quinchas Association Contract located in the prolific Middle Magdalena Valley of Colombia. The contract contains three known fields, Arce, Baul and Bukhara. As previously announced, Kappa has estimated that the Arce field has mean recoverable reserves of 10 million barrels although no formal resource or reserve has yet been prepared under any of the accepted standards and this figure has not been independently verified by the Company.

Statement by Tony Baldry, Chairman, Black Rock Oil & Gas PLC:

Black Rock Oil & Gas plc ("Black Rock") continues to focus on Colombia and the North Sea and plans an active exploration and development program during 2007.

In Colombia, Black Rock has an interest in two licenses, the Las Quinchas Association Contract and more recently the Alhucema E&P Contract. In the Las Quinchas Contract, Black Rock is actively pursuing its obligations under the farm-in contract signed with Kappa Resources Colombia Limited (Kappa) in April 2005 in which it agreed to fund certain exploration drilling activities in order to earn a right to obtain, subject to Ecopetrol's approval, a 50% interest in the two blocks.

The Arce 4 appraisal well drilled in June 2006 has been a success, with oil flowing at the rate of 30.5 barrels per day under standard conditions. The well has been drilled to a total depth of 3,073 feet and intersected a gross 300 foot oil section. Subsequently the well underwent testing and analysis of the oil indicated that, while classified as heavy with a gravity of 16-17 degrees API, it is liquid at room temperature and pressure. On completion of operations at Arce 4, the drilling rig was used to re-complete the gravel pack on Arce 2.

Subsequently, the Arce field then was placed in a long-term steam injection test, utilizing the Arce 2, 3 and 4 wells. Despite a number of delays due to delivery and installation of equipment and additional technical requirements of Ecopetrol, operations are now underway and are expected to last until the end of Q2 2007 according to the Operator, Kappa. After cold flow production from the wells to create some void space, steam is sequentially injected into each well for a period of 1-2 weeks, followed by a soak period of 1-2 weeks whilst the reservoir heats up. Each well is then put into production for the remainder of a 3-month test cycle. The steam injection test will probably involve a minimum of 2 cycles for a total test lasting a minimum of 6 months.

Subject to successful completion of the Arce Field test, it is the intention of the Joint Venture to proceed with development of the Arce Field as soon as possible.

Our operator and joint venture partner, Kappa, estimates that the mean recoverable reserves of the field have increased significantly to above 10 million barrels following recent seismic reinterpretation and mapping although no formal resource or reserve has yet been prepared under any of the accepted standards and this figure has not been independently verified by the Company. Consequently, further appraisal wells may be required to fully evaluate these additional reserves in 2007 and 2008.

The dispute with Kappa that arose in November was successfully resolved following two days of meetings in Colombia in December. A disputed default notice issued by Kappa was withdrawn and Black Rock agreed to make a payment of approximately US$600,000 in December 2006 and a further payment of approximately US$ 1,000,000 in January 2007 to Kappa to fulfill its obligations in the Las Quinchas farm-in. These have now been completed and Black Rock has formally requested that Kappa now approach Ecopetrol for approval of Black Rock's 50% assignment.

Most of the funds supplied to Kappa recently will be utilized on the drilling and testing of a low-risk, heavy oil exploration prospect known as Acacia Este in the Las Quinchas Association Contract area. This shallow structure should be drilled in Q1 2007.

Therefore the funds recently provided to Kappa not only complete Black Rock's farm-in obligations on the Las Quinchas Association Contract but also will be used to drill the largest untested shallow target in Las Quinchas.

The Baul Oil Field located in the southern part of Las Quinchas Association Contract is also expected to be investigated in 2007. One well on the field was on oil production during the 1960's but was shut-in because of the then low oil price. If in good condition the Joint Venture will recomplete this well and establish test production possibly in the second half of 2007. Alternatively, a further well may need to be drilled into the Baul Oil Field.

Closer to home and during the autumn the Company participated in its first North Sea well.

Within the UK Southern North Sea, Black Rock has a 15% interest in Blocks 49/8c and 49/9d, operated by Wintershall Noordzee. The Monterey Gas Field is located in Block 49/8c and was estimated by the field operator to contain 165 billion cubic feet of gas reserves although no formal resource or reserve has yet been prepared under any of the accepted standards and this figure has not been independently verified by the Company nor updated subsequent to the recent appraisal well.

Discovered in 1989, the field is located approximately 15 kilometers west of the Windermere gas platform and south of the Schooner and Ketch gas fields. The water depth in this location is about 35 meters.

The Monterey well was spudded on 21 September 2006 and reached Total Depth on 29 October 2006. Testing of the Monterey appraisal well was completed in November 2006. The well flowed natural gas (principally methane, ethane and propane) from several perforated intervals in the Carboniferous reservoir section during the well test period, at approximately 850,000 cubic feet/day through a 2 inch choke. Observed flow rates might have been impeded by relatively low reservoir quality and reservoir damage within the well. In common with many vertical appraisal wells in the Southern North Sea, the gas flow rates were less than can be expected from a horizontal development well. Severe weather then delayed departure of the rig until 14 December 2006.

The field operator is currently undertaking detailed technical evaluation of the well results and simulation of various development options to put to the Joint Venture Partners during the summer of 2007. Amongst the options being considered is to drill one or more horizontal producers. Typically, such wells will have horizontal sections of 500m or more in order to obtain commercial rates and the well may also require hydraulic fracturing. If developed, the field operator is considering piping the gas to the nearby Windermere and Markham Fields and from there to the Netherlands.

With this in mind Black Rock recently raised £1,742,500 (before expenses) in January 2007 to finance the development of the assets set out above as well as funding ongoing working capital. In order to provide a balance to its portfolio of assets, Black Rock is also continuing to search for development or production projects that are likely to provide cash flow in the near future or low-cost, low-risk exploration projects with considerable upside. A number of these are currently under consideration and shareholders will be advised about the technical and financial implications should the Directors consider the assets of potential significant value to Black Rock.

For More Information on the Offshore Rig Fleet:
RigLogix can provide the information that you need about the offshore rig fleet, whether you need utilization and industry trends or detailed reports on future rig contracts. Subscribing to RigLogix will allow you to access dozens of prebuilt reports and build your own custom reports using hundreds of available data columns. For more information about a RigLogix subscription, visit