Cygam Updates Operations in Canada, Tunisia and Italy

Cygam Energy

Cygam Energy Inc. reports that completion operations at the 6- 30-50-16 W5M development well in the South Edson gas/condensate field have commenced. The corporation has a 9% working interest in the field. Additionally, plans are being finalized to deepen the 4-21-50-16W5M well to the main Elkton/Shunda producing zone in the same field.

In Tunisia, Cygam will participate for a 14% working interest in the drilling of the TT-2 exploratory well on the Sud Remada permit operated by Storm Ventures International. Drilling operations are expected to commence toward the beginning of March once the Canadian High Arctic rig becomes available. The TT-2 well will be drilled on a large Ordovician structure. The well will be drilled to a total depth of approximately 2,000 meters, expected to take approximately 30 days. The Sud Remada permit covers an area of 1,173,215 acres and several un-drilled structures with potential in the Ordovician and in the Silurian have been mapped.

Cygam is also finalizing plans to drill the first exploratory well on its Bazma permit and may use the High Arctic rig after drilling operations are completed at Sud Remada. This exploratory well will be drilled on a seismic anomaly similar to the offsetting Tarfa gas/condensate field and will test the Triassic Tagi sands at an expected depth of approximately 2,500 meters. The Bazma permit encompasses an area of approximately 400,000 acres and several Triassic Tagi leads have been identified by seismic data so far. Both the Tarfa and Baguel fields, which are immediately adjacent to the southwest corner of the Bazma permit, produce gas and condensate from the same Tagi formation.

At Jorf, Cygam is finalizing plans to acquire approximately 200 kilometers of new 2-D seismic data in the northern portion of this 931,060 acres permit.

Interpretation of extensive 2-D seismic data on the Sud Tozeur block, comprising 1,082,283 acres located in west central Tunisia adjacent to the Algerian border, is currently being finalized. Cygam completed a 61 km 2-D seismic delineation program on the permit in early 2007 and has integrated the new and old seismic data to finalize the best drilling location on a large structure, with Triassic and Ordovician reservoir potential. This structure was previously explored by another operator in 1997 by drilling the Sud Nefta-1, well to a depth of 4,677 meters. The well encountered numerous oil and gas shows in Triassic, Ordovician and Cambrian clastic reservoirs during drilling operations. However, on subsequent testing, the formations failed to produce hydrocarbons. Cygam may consider re-entering and sidetracking the Sud Nefta-1 well to test undamaged and potentially thicker sections of Triassic and Ordovician reservoirs. It is anticipated that drilling operations at Sud Tozeur may commence in Q4, 2008, subject to rig availability.

In Italy, Cygam is evaluating a proposal to acidize the Posta Piana-1 well, drilled in April 2007, to potentially increase its deliverability. The Corporation is also finalizing the interpretation of all 2-D seismic data acquired on the B.R268.RG offshore permit in the Adriatic Sea. Evaluation of available jack-up rigs to drill the Elsa structure on this permit is under way, with a potential 2009 drilling target date. The Corporation currently has a joint venture partner which will pay 60% of the Elsa drilling costs to earn a 40% interest in the permit.

Cygam and its partners are finalizing the seismic interpretation on the Montalbano permit where a well is planned for Q4, 2008, or Q1, 2009. Cygam is the operator of the permit, with a 30% working interest. The well will be drilled to approximately 2,000 meters to test Pliocene sandstones and pre-Pliocene carbonate reservoirs which are gas bearing in nearby fields.

The Corporation is also interpreting available 2-D seismic on its 100% owned C.R148.VG permit, offshore Sicily, and on the recently awarded Civitaquana permit in central Italy. At Civitaquana, Cygam has a 65% working interest inclusive of a 5% free carried interest in the drilling of the first well.

On the Tunisian permits operated by Cygam, the Corporation has signed an option agreement with Zappa Resources Ltd., whereby Zappa can earn a 10% working interest in the Bazma permit by paying 15% in the first two wells drilled on separate structures, and can earn a 10% working interest in the Sud Tozeur permit by paying 15% of the first two wells drilled on separate structures on that permit. Zappa will also continue its joint venture agreement with Cygam on the Jorf permit by paying 15% of a proposed 200 kilometer seismic program slated for the northern section of the concession. Cygam has also received expressions of interest from other companies willing to participate in exploratory activities on its permits in Tunisia.