Melrose Gets Strong Increase in Egyptian Output

Melrose Resource reported that its net entitlement production from the El Mansoura and South East El Mansoura concessions in Egypt during the first quarter 2008 averaged 14,890 boepd, comprising 69% gas and 31% hydrocarbon liquids. The average production rate reflects strong contributions from the West Khilala and West Dikirnis fields, which are currently producing at gross rates of 103 MMcfpd of gas and 10,000 bpd of oil, respectively.

The increasing Egyptian output has allowed the Company to achieve a new net peak production rate at a group level of 22,400 boepd during the quarter. This compares favourably with the 2008 production guidance of 20,000 boepd which remains unchanged.

Government approval has been received for the development of the South Zarqa and North East Abu Zahra fields which were discovered in late 2007. These fields contain combined gross reserves of approximately 59 Bcf of gas and 1.2 MMbbls of liquids which will be produced via a common 35 kilometre, 10 inch flow line tied back to the existing South Batra facilities. First production is expected early in the second quarter 2009.

Commenting on the above, David Thomas, Chief Executive, said, "We are very pleased with the production performance of our Egyptian fields during the first quarter of the year and the speed with which we received Government approval for the new South Zarqa and North East Abu Zahra developments. We are also encouraged by the well test results on East Abu Khadra and the Damas discovery, which suggest that they are both candidates for early production tie-back."