Cygam Signs Drilling Contract for Jorf

Cygam Energy Inc. has signed a contract with Great Wall Drilling Co. Tunisia to drill a 2,500-meter well in the Jorf permit, onshore Tunisia, in July 2007.

Drilling is expected to start after Great Wall completes its contractual obligations with another operator towards the end of June. In preparation for the upcoming drilling, Cygam has already acquired long delivery items such as wellhead, casing and related equipment.

Cygam currently has a 55% working interest plus a 15% free carried interest in the first well to be drilled on the permit. Joint venture partners committed to pay 45% of seismic and drilling costs to earn 30% working interest in the first structure drilled. In addition, joint venture partners have a further option to farm-in on other structures within the concession on the same terms.

Two major separate anomalies within an extensive reef development area have been outlined through the interpretation of approximately 2,000 kilometers of existing older vintage seismic data. The two identified anomalies are interpreted as being reef build-ups of upper to lower Permian age, with significant thickness and lateral extent. Processing of a recently acquired 166 km 2-D seismic survey is expected to be completed shortly. The new seismic data will be interpreted and integrated with the older data and will be used to determine which anomaly will be drilled first and to finalize the exact well location.

The Jorf permit, located onshore south-central Tunisia, encompasses an area of approximately one million acres. The northern boundary of the exploration permit is within 35 kilometers of the Gulf of Gabes. Major oil and gas pipelines from the giant El Borma oil and gas field and other southern Tunisian oil fields traverse the Jorf block (within 10 to 40 kilometers, respectively, from the two potential locations) and connect to the La Skhira oil terminal in the Gulf of Gabes.