EnCore, Star to Extend Offshore Gas Storage Feasibility Study

EnCore Oil plc and Star Energy Group plc have agreed to extend the Forbes gas storage feasibility study and farm-in deal to the Esmond field, with an option to extend it further to the Gordon field.

This announcement follows that made in December 2006 when Star Energy signed a farm-in agreement to EnCore's UKCS Block 43/8 (the Forbes field) to investigate that field's potential for conversion into a seasonal gas store with up to 50 bcf of working gas capacity. The extension announced today includes EnCore's UKCS Block 43/13a (the Esmond field) and potentially UKCS Blocks 43/15a and 43/ 20a (the Gordon field) at a later date, subject to certain conditions. All three blocks (43/13a, 43/15a and 43/20a) are currently 100% owned by EnCore.

Alan Booth, Chief Executive Officer, said of the latest agreement:

"We are pleased to be able to announce a significant extension of our current agreement with Star Energy to cover the entire Forbes, Esmond and Gordon complex. The UK is becoming increasingly reliant on imported gas supplies, which can be subject to supply disruptions caused by market, political and technical factors. Security of supply has been identified by the UK Government as a critical issue that must be addressed. It has long been known that the UK lags much of Europe in the provision of gas storage. This project has the potential to more than double the UK's gas storage capability."

Under the terms of the new farm-out agreement, Star Energy will undertake an extended feasibility study on the Esmond and Gordon field areas. In addition, Star Energy will pay a further £250,000 (to the £1 million already committed to the Forbes field) towards the cost of extending the currently planned low density 3D seismic survey to incorporate the Esmond and Gordon field areas. As with the Forbes field agreement, this farm-out allows Star Energy to earn up to 50 percent. of the licenses and to become operator. If the feasibility study proves positive, Star Energy will conduct a Front End Engineering & Design (FEED) study and will also bear the cost of drilling the first well in the farm-out areas. Under this agreement with EnCore, the extended feasibility study must be completed by the end of 2007.

The Esmond field was originally developed by Hamilton Oil and lies in close proximity to both Forbes and Gordon which were produced via a tie-back to Esmond. The original gas in place on Esmond was in the order of 350 bcf.

Preliminary studies undertaken by Star Energy indicate the Esmond field has the potential to be developed into a seasonal gas store with over 100 bcf of working gas capacity.

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