Naftex Disappointed with Caravela Sul Extension

Naftex Energy and its wholly-owned subsidiary Coplex Brasi, announce that the Exploration well SCS-11, drilled approximately 5 kilometers north of well SCS-10 to verify the northern extension of the Caravela Sul discovery, is now completed. Coplex Brasil participates with a 27.5% interest in three operating licenses offshore the Santa Catarina Coast in southern Brazil, namely the Coral, Estrela do Mar and BS-3 licenses, all with Petrobras as operator.

Exploration well SCS-11 reached targeted reservoirs around 50 meters lower than anticipated and they were all water filled. The parties will now re-evaluate the reserve estimates for Caravela Sul. Even though the results of the well were disappointing the partners still view Caravela Sul as a promising discovery with reserves at least in line with the Coral field. As the discovery most likely extends into block BMS-12 south of block BS-3, the further development of the two licenses is expected to be coordinated between the licenses.

The second production well at the Coral field, well Coral D4, has taken longer to complete due to bad weather as well as further technical problems. The well is now in its final stages of completion. As soon as this well is in production, the rig will be moved to re-enter well Coral D3, which was put on production on February 3rd and temporarily shut down for safety reasons on March 13th, with the aim to re-complete the well. Thereafter the third and final well Coral D7 will be completed.

As a consequence of delays and cost overruns incurred by the operator, Coplex has withheld payments of cash calls in the projects. The operator has subsequently filed default notices against the Company for non-payment, of which only the BS-3 license has not been rectified. To protect its interest the Company has requested a temporary injunction against the consequences of any non-payment of cash calls.