Carpathian Reports on E&P Activities in Central Europe

Carpathian Resources Limited has issued a production and exploration for the second quarter ended June 30, 2008.

Production Activities:

Janovice Gas Field (60% interest)

Production for the period was 1.82 million cubic meters (64.3 million cubic feet), an average of 20,000 cubic meters per day (0.7 million cubic feet). At this rate the volume of fluids produced was stable at around 0.79 cubic meters per day.

The gas production, a 7.5% quarter on quarter increase in the gas price, and the continued strengthening of the Czech Koruna resulted in an income net of operating expenses at the field level of over A$403,000 (GBP 197,000) for the period.

Exploration Activities:

Janovice, Skalice & Ra*kovice - Morávka (60%)

An exploration strategy to further explore the permits, delineate any extension of the Janovice field and define drilling targets has not yet been agreed with Unigeo, the Operator. The Company is considering seismic and other, cheaper and less definitive survey methods.

Mosnov, 90% interest (contributing 100%)

The Mo-1 Skotnice well was spudded in late 2006 close to two depleted gas fields and reached a final total depth of 430 metres. Only minor shows of gas were recorded whilst drilling the target horizon yet analysis of the wireline logs indicated the presence of a 3.2 metre gas column in a good quality Miocene sandstone reservoir with up to 17% porosity. Core analysis confirmed the quality of the reservoir yet no flow was recorded when the section was tested. It is not clear why such a good reservoir rock failed to produce a flow. Damage to the formation while drilling or whilst cementing the production string is suspected, as is inadequate perforating of the production string.

Contractual matters delayed further work until February 2008 when a simple operation program was carried out to try to stimulate a flow from the Miocene sand. A small amount of completion fluid was successfully pumped through the perforations establishing communication into the well bore. However, when the pressure was released, no fluid flowed back, even after the fluid column had been unloaded and the well was again at atmospheric pressure.

In late June final preparations were being made to hydraulically fracture the reservoir and treat it with acid (an 'acid frac'). The operation is designed to establish permanent pathways between the reservoir and the well and to clean up or alleviate any formation damage that may have been caused during the drilling of the well and the cementing of the casing.

Morava, 90% interest (contributing 100%)
The Morava project is located near Hodonin, a regional centre for oil and gas production in the northern part of the Vienna Basin, a prolific oil and gas producer. A possible target (Vazany) that could contain a significant quantity of gas has been identified in the flysch sequence of the Magura Nappe but until the project is included in the local land-use plan no further progress can be made. Unigeo, the operator, is working to achieve this.
Roznov, 90% interest (contributing 100%)
The four permits cover a large area of prospective sediments in a variety of potential traps on the faulted margin of the Palaeozoic European Platform. The largest features are a series of channel like traps on the basin slope, but differences between local and regional planning requirements are not resolved and are delaying progress. A drilling location to test the Zar feature, a Miocene trap draping the platform edge, has been selected. Again progress cannot be made until the project is included in the local land use plan and a power line is moved.