Egdon Starts Drilling at Grenade-3 Well in France

Egdon Resources Plc announces the commencement of drilling operations at Grenade-3, in Egdon's operated St Laurent Permit in SW France. Egdon holds a 33.4% interest in the well.

The COFOR MAS 3000 rig completed the rig move on Jan. 9, 2008, and drilling operations commenced on Jan.10 2008. The Grenade-3 well will take approximately 30 days to reach target depth.

The Grenade-3 well is an appraisal of the Grenade heavy oil accumulation. The discovery well, Grenade Sur Adour-1, was drilled by Elf in 1975 and found a 97m column of 10 degree API oil. Between 1976 and 1985, around 8,000 barrels of oil were recovered from intermittent tests, the well being finally plugged and abandoned during a period of low oil prices in 1985.

An independent report by RPS Troy-Ikoda in 2004 determined that the oil-in-place within the structure was in the range of 68 to 485 million stock tank barrels (MMStb), with a Best Estimate of 221 MMStb. During 2005 the Company acquired 40km of 2D seismic and 12km2 of 3D seismic data over Grenade and, by integrating the new data with both existing reprocessed 2D seismic data and the results of an extensive regional core study, was able to better define the trap. The resultant mapped trap is a large three-way up-dip pinch-out of the reservoir on a low energy carbonate platform. Based on this revised trapping model, Egdon has determined a range of oil-in-place of 95 to 945 MMStb with a Best Estimate of 300 MMstb.

Grenade-3 is a step-out to the Grenade-1 discovery well and will be drilled as a vertical pilot hole designed to confirm the oil column and reservoir distribution. Contingent upon the results of this pilot hole, a horizontal sidetrack will be drilled and completed for a long term production test to be undertaken. The production test would utilise modern completion, pumping and viscosity reduction methods in the horizontal reservoir interval to determine the likely recoverable reserves and commerciality of the Grenade oil accumulation.