TransGlobe Makes New Discovery in Yemen

TransGlobe Energy Corporation has successfully appraised a new discovery well at An Nagyah #3 on Block S-1 in the Republic of Yemen.

The An Nagyah #3 well was drilled to a total depth of 1,292 meters and suspended as a potential oil well. An Nagyah #3 is located 1.3 kilometers west of the An Nagyah #2 well which tested light sweet oil at 1,091 Bopd from a gross 28 meter Upper Lam oil reservoir (December 10, 2002 announcement). Two separate reservoirs were encountered, the Upper Lam and the Lower Lam.

The An Nagyah #3 well encountered the Upper Lam sandstones in a structurally higher position than the An Nagyah #2 well and found a thicker gross reservoir section (43 meters gross thickness). Better porosity and permeability are indicated on the logs than found at An Nagyah #2. The sands were not flow tested as they were structurally higher and were therefore entirely above the gas/oil contact found in the An Nagyah #2 well.

In addition to the thicker Upper Lam sands, the An Nagyah #3 well also discovered a new pool in the Lower Lam sands. This new zone has a net pay of 5.0 meters and a tested oil column of more than 50 meters. The zone was perforated and flow tested at a rate of 240 Bopd of 42 degree API, light, sweet oil. A two meter water interval was confirmed at the base of the zone during testing. The core and test data indicate the Lower Lam reservoir has less porosity and permeability than the Upper Lam reservoir and therefore may require stimulation to enhance production. The discovery of a new productive horizon in the Lower Lam should augment development economics.

The An Nagyah #3 well has proved the continuity and quality of the Upper Lam reservoir and discovered a new oil reservoir in the Lower Lam sandstones. This encouraging result warrants an additional appraisal well to determine the extent of both reservoirs. Therefore a new appraisal well at An Nagyah #4 will be drilled, located 1.2 kilometers north northwest of An Nagyah #3 and 2.5 kilometers west northwest of An Nagyah #2. The drilling rig is scheduled to move to An Nagyah #4 in the next few weeks.

Commercial development of the An Nagyah discovery will be contingent on proving a minimum threshold reserve size. The An Nagyah structural closure, as mapped on 3-D seismic data, encompasses up to 17 square kilometers (approximately 7 square miles) and therefore could require several additional wells to prove the full extent of the oil accumulation. If threshold reserves are established, the proximity to pipeline facilities would allow "fast track" development.