Niko Says D6 Remains On Track for Start-up in Less Than a Year

Niko Resources says exploration continues in the D6 Block with the R1 well, which was successfully drilled during the quarter. R1 is located 22 kilometers southwest of the P2 discovery in 2,010 meters of water, which is the deepest water depth drilled to date in the D6 Block. The R1 well reached a total measured depth of 4,857 meters and encountered two significant gas-bearing zones in the Miocene stratigraphic interval. The success in these zones opens up new areas in the deeper stratigraphic levels for the D6 block. Data obtained from logging and modular dynamic testing (MDT) confirmed the presence of hydrocarbons in the reservoir intervals. All well information has been submitted to the Directorate-General of Hydrocarbons (DGH) and other concerned authorities as a new discovery.

In the ongoing Dhirubhai field development program, KG-D6-A5 was successfully drilled. Extensive coring was carried out on A-5 to provide further reservoir information to aid in the optimal development of the Dhirubhai gas field. The A-5 well will be completed for production later in 2007. Another development well, KG-D6-A6, has finished drilling. The A-6 well was also cored extensively and will also be completed for production later in 2007. Four additional development wells, B4, B6, B-11 and A-13 spudded and are currently drilling. This brings the total number of development wells drilled to date and currently drilling to 13 wells of a total of 18 wells targeted prior to the commencement of production.

The development plan for the Dhirubhai 1 and 3 gas fields has provisions for the natural gas production rate of 2.8 billion cubic feet per day (280 million cubic feet per day net to the Company) with corresponding Phase I initial field development costs estimated at US$5.2 billion (US$520 million net to the Company). The Company has spent US$76.9 million to June 30, 2007 of the expected US$520 million estimated for the project. Commencement of production is scheduled for mid-2008. The approved field development plan of Dhirubhai 1 and 3 provides flexibility in the critical portions of the facilities to facilitate gas production of up to 4.2 billion cubic feet per day.

Construction of the onshore terminal, laying the grid of gas pipelines and installation of the offshore facilities are all progressing to enable gas production from the Dhirubhai gas field in 2008. The operator's reports as of the end of July 2007 indicate that the offshore facilities are 50 percent complete and the onshore facilities are 35 percent complete.

There have been two oil wells drilled in the D6 Block. A high-intensity 3D acquisition program (Q seismic) was carried out to further increase the resolution of the seismic over the field. The field is on schedule to commence production in the second quarter of 2008, initially from two oil producers with initial targeted production of 30,000 to 35,000 barrels per day (3,000 to 3,500 barrels per day net to the Company). More oil producers and gas injector wells will be drilled to complete the oil development plan.

There are currently two drillings rigs active on the D6 block. The C. Kirk Rhein, Jr. rig has finished drilling the A6 development well and is currently drilling the B6 development well. This rig is expected to move to another block in the last calendar quarter of 2007. The Deepwater Frontier rig has returned to D6 and is currently drilling the B4, B11 and A13 development wells. The D-534 drillship is expected to commence drilling on the D6 Block in the fourth calendar quarter of 2007 and the Deepwater Expedition in the third calendar quarter of 2008.

NEC-25 Block - The C Kirk Rhein, Jr. rig is expected to return to the NEC-25 block in the fourth calendar quarter of 2007 for drilling of the third and fourth wells of the planned drilling program. In addition, the Deepwater Driller-4 will commence drilling on the NEC-25 in the fourth calendar quarter of 2007. Development plans for the six gas discoveries that have been declared commercial by the Indian regulatory authorities have been prepared, approved by the Operating Committee and submitted to the Government of India.

In the deepwater block MN-DWN-2003/1 (D4), located in the Mahanadi Basin, a 2,365-kilometer 2D seismic acquisition program was completed and the data has been processed. Evaluation of the data set is ongoing and a further 2,800-kilometer 2D seismic program is scheduled for later in 2007, along with a 3,600-square-kilometer 3D seismic program. A drilling date for the first well is yet to be set.

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