Vanco Continues Exploration in Cape Three Points Deepwater Block

The Government of the Republic of Ghana, the Ghana National Petroleum Corporation (GNPC), Vanco Ghana Ltd. and LUKOIL Overseas Ghana Ltd., signed a new Petroleum Agreement, covering the Cape Three Points Deepwater block.

This agreement will replace the existing Petroleum Agreement which expires at the end of April 2009. The new agreement provides Vanco and LUKOIL with the opportunity to continue the exploration of the area, during which new 3D seismic and additional drilling activities are planned. The new agreement also provides GNPC and the government of Ghana with significant commercial benefits, including higher royalty and increased GNPC participation. The new Petroleum Agreement also gives ownership of Associated Gas to the State.

The Cape Three Points Deepwater block encompasses an area of 5,146 square kilometers in water depths ranging from 200 to 3,000 meters in the Tano Basin. Vanco (Operator) holds a 28.34% participating interest in the Cape Three Points Deepwater block with LUKOIL holding a 56.66% participating interest. GNPC, the state oil company, holds a 15% carried interest, with the option to acquire up to an additional 5% in any commercial discovery.

The new agreement comes as the Aban Abraham deepwater drillship departs Cape Town, South Africa after completing final retrofit operations to enable the unit to drill in water depths of up to 2,000 meters. The Aban Abraham will mobilize to Ghana to commence the Dzata-1 exploratory well by the end of April 2009.

Situated in 1,874 meters (6,148 feet) water depth, the Dzata Prospect is a large anticlinal structure with numerous Upper and Lower Cretaceous potential reservoir horizons and distinct direct hydrocarbon indicators, including flat spots and a "gas chimney." The well will be drilled to a total depth of approximately 4,786 meters, or 2,912 meters below the mud line.

"The Aban Abraham drilling unit is finally ready to drill this exciting prospect where we are hopeful of a significant discovery," said Vanco President, Gene Van Dyke. "Vanco and LUKOIL appreciate the assistance and support of GNPC and the Ministry of Energy in completing the new Petroleum Agreement which will allow the partnership to continue the aggressive exploration of the Cape Three Points Deep Water block."

Vanco is a leading deepwater independent with activity in Cote d'Ivoire, Ghana, Equatorial Guinea and the Ukrainian Black Sea.