Nautical, Partners Spud Second Kraken Well in UK North Sea

Nautical Petroleum has announced that the Kraken appraisal well 9/2b-3 spudded on September 21, 2008 using the Sedco 704 drilling rig.

The 9/2b-3 appraisal well lies 3.3 km ENE of the successful 9/2b-2 well and 5km from the original 9/2-1A discovery well. The well is designed to intersect the oil water contact (OWC) and investigate the Tertiary Heimdal Sandstone distribution.

The Joint Venture has brought forward the well from Spring 2009 and are now ahead of the critical path of activities leading to the submission of a field development plan by the end of 2009. Results are expected in mid October 2008.

Nautical successfully drilled the 9/2b-2 well in November 2007, where an oil column of at least 252 feet was encountered in the Palaeocene Heimdal horizon. Subsequent technical work on Kraken suggests in place resources of between 376 and 1255 million barrels of oil.

Nautical has farmed down a further 10% of the well to Canamens Energy North Sea Limited for a full carry of its costs up to US $8.75 million. In addition a gross 30% interest was previously farmed out to Celtic Oil Limited (a wholly owned subsidiary of SK Energy) for a premium of US $4.5 million. Assuming that the well is drilled within budget Nautical will have no financial exposure to the well cost.

Interests held in block 9/2b are Nautical Petroleum plc 35%, Canamens Energy North Sea Limited 35% and Celtic Oil Limited 30%.

Commenting on the appraisal progress, Steve Jenkins, Chief Executive of Nautical, said, "The identification of the oil water contact on Kraken will enable Nautical to refine its geological interpretation of the reservoir, and although being an ambitious location, will provide invaluable information for our forward development plans.

"The acceleration of the Kraken appraisal program, illustrates a strongly aligned Joint Venture who are keen to prove up volumes of oil to progress to FDP submission by the end of 2009."