Melrose Reports Progress with Bulgaria, Egypt Wells

Melrose Resources plc on Tuesday announced an update on its exploration, appraisal, and development wells that are drilling in Bulgaria and Egypt.

In Bulgaria, the Izgrev No.1 exploration well was spudded on 16 March 2007 and reached total depth at 1,800m on 27 March. High gas shows were reported while drilling over an extensive interval from 1,115m to 1,250m. Wireline logs indicate the presence of several gas bearing intervals between 1,150m and 1,225m within a high-porosity diatomite shale. This reservoir, although normally of low permeability, has been drilled within a fault zone and may be naturally fractured enough to allow gas to flow at the Izgrev well location. Additional information will be acquired in order to assess the commerciality of the reservoir through further logging and a formation flow test.

In Egypt, the West Khilala No.6 appraisal well was drilled in order to establish the down-dip limits of the field on the western flank. The well achieved its objective by extending the known limits of the reservoir beyond the mapped area of high seismic amplitude. The well intersected a 39-ft gross pay interval in interbedded sands and shales between 10,012ft and 10,051ft with 16ft attributed to net pay. The top reservoir was intersected slightly lower than prognosed. The well results are likely to provide an increase in proven reserves and allow a substantiation of the total reserves, which are not expected to increase.

The West Khilala No.6 has now been sidetracked to a location 30ft updip of the original well. This well, West Khilala No. 6 ST, is currently being logged and initial results indicate a gross pay interval of 69ft with a high net-to-gross ratio. Following the completion of this well the rig will move to the West Khilala No. 5 development location in the northwest part of the field.

The West Dikirnis No.3 development well successfully intersected a 40-ft gross oil column with 37.4ft of net pay in the Qawasim formation between 8,355ft and 8,395ft. The well was drilled in the central part of the field as an oil producer and will be flow tested later this week. The rig will remain on the West Dikirnis No.3 surface location to drill a deviated appraisal well, West Dikirnis No.6, towards the southern limits of the field.

Robert Adair, Melrose's Executive Chairman, said:

"The news from the Izgrev well is further confirmation of the presence of active hydrocarbon systems in our Bulgarian acreage. It is not yet clear, however, whether Izgrev will provide us with commercial reserves. A further announcement will be made in due course when we have gathered and collated all of the test results and analyzed the data.

"In Egypt, while the information from West Khilala No.6 does not increase total reserves it is expected to increase proved reserves. The West Khilala No.6 ST should also provide us with surplus production capacity in the field. The result of West Dikirnis No.3 is important in increasing field productive capacity in the West Dikirnis Field towards our target of 10,000 bopd. Development of West Dikirnis is progressing well with first production scheduled before the end of the third quarter."

Melrose Resources plc is an exploration and production company with assets in Bulgaria, Egypt, France and the United States.