Circle Oil Completes Sebou Discovery as Potential Producer

Circle Oil has announced the following operating update.


Sebou Permit; Discovery

The exploration well CGD-9 has been drilled, logged and successfully tested in the Sebou Permit, Morocco.
The Company confirms a discovery in the Lower Guebbas Formation with the well testing gas at a sustained rate of 8.86MMscfd. The well has been completed as a potential producer.

A full technical evaluation of all the results of the well is underway which will allow for forward planning as a precursor to further assessment of the resource, including conducting an extended well test and a more complete estimation of the reserves.

The drilling rig has now moved to the next drilling location on this permit to commence drilling of the KSR-8 well, the third of a planned six well drilling program in the area.

The Sebou Permit (Circle Oil 75% working interest, ONHYM 25%) lies northeast of Rabat in the Rharb Basin, Morocco. The Rharb Basin is a foredeep Basin located in the external zone of the Rif Folded belt. The concession agreement includes the right of conversion to a production licence of 30 years, plus extensions, in the event of commercial discoveries.

Ouled N'Zala Concession; Commerciality indicated on second well

Planning for the extended well test on the ONZ-6 discovery, which flowed under test at a sustained rate of 3.32MMscfd, is well advanced and initial analysis of the results from the well testing indicates it is likely to be commercial. The final Reserve estimation will not be known until completion and analysis of the extended well test.

The ONZ-4 well which was scheduled to go into production in mid September is now in continuous production at a rate of approximately 1.5MMscfd. Following the initial start-up, problems with the main pipeline infrastructure occurred and these have now been resolved.

All of the gas produced in the Rharb Basin is sold locally and there is substantial demand for additional gas supplies in the area.


Grombalia Permit; Serdouk exploration well

The Serdouk exploration well has been completed and logged to the targets in the Bou Dabbous and Abiod formations with a target depth of 1620 meters. The well confirmed the prospect stratigraphy and structure but no oil shows were encountered. Logging and sampling indicates a lack of permeability leaving the formations "tight." The well has been plugged and abandoned.

David Hough, CEO of Circle, said, "The second consecutive discovery in our drilling campaign in Morocco is more excellent news for Circle. The well has been completed as a potential producer and the initial field test results are above our expectations for this area. The flow rates under test are amongst the best since drilling began in the Rharb. The results to date show that we are definitely benefiting from the additional information provided by the 3D seismic and the advanced quantitative techniques we are employing to achieve success.
Overall, we are extremely pleased with the success of our drilling program to date and look forward to the result of the next well."