Verenex Updates on Libya Operations, Confirms Area 47 Oil Discovery



Verenex has provided an update on Libya operations, which includes the annoucement of a new oil discovery based on completion of successful flow testing.

Libya Operational Update

I1-47/02 NFW Exploration Well Confirmed as Oil Discovery

The Company is pleased to confirm that the I1-47/02 new field wildcat ("NFW") exploration well is an oil discovery based on completion of successful flow testing. The I1 discovery is the Company's eleventh confirmed oil and gas discovery in Area 47 since drilling began in September 2006.

The I1-47/02 well (well No. 16) was drilled and cased to a depth of 10,925 feet in the Memouniat Formation. It is the first well drilled in the Central 3D seismic survey area in the north-western part of Block 2 approximately 6.5 kilometers south of AGOCO's G1-NC02 oil and gas discovery drilled in 2001. Approval to drill the I1 well and to classify it as a NFW exploration well was received from the NOC after the Company agreed to carve out a discovery area from Area 47 around the pre-existing G1-NC02 well.

The Company carried out extended flow tests on the I1 well from a 44 foot perforated interval in the Memouniat Formation and a 40 foot perforated interval in Basal Sand 3 in the Lower Acacus Formation. The tests yielded a combined maximum measured flow rate, as restricted by test equipment capability, of approximately 3,354 bopd (gross) of light sweet crude oil and 6.8 mmcf/day (gross) of natural gas through choke sizes on particular intervals ranging from 64/64ths to 80/64ths inch. Measured API gravity of the crude oil ranged from 39 to 43 degrees.

At the request of the NOC, and consistent with earlier test protocols, flow rates were also measured through a smaller more restrictive choke size of 32/64ths inch which yielded oil and gas flow rates of 2,100 bopd and 3.2 mmcf/day (gross), respectively.

J1-47/02 NFW Exploration Well Confirmed as Oil Discovery

The Company is pleased to confirm that the J1-47/02 NFW exploration well is an oil discovery based on completion of successful flow testing. The J1 discovery is the Company's twelfth confirmed oil discovery in Area 47. The J1-47/02 well (well No. 17) was drilled and cased to a depth of 11,420 feet in the Memouniat Formation. It is located in the southern part of Block 2 approximately 6.0 kilometers northeast of the Company's A1-47/02 oil discovery and 3.0 kilometers west of the F1-47/02 oil discovery. The J1 well was drilled on a four-way dip closed structure identified on the South 3D seismic survey. The pre-drill prognosis indicated some potential that the structure could be a northeast extension to the A1-47/02 field.

Extensive formation evaluation results indicated the presence of hydrocarbons in two sand intervals in the Lower Acacus Formation (Basal Sand 1 and Upper Shoreface). In Basal Sand 1, the results indicated a thick oil column of approximately 66 feet with an underlying water oil contact that is at a different subsea depth than the contacts found in the A1-47/02 field and F1-47/02 well suggesting that the J1 structure may be isolated. Basal Sand 1 contains the majority of the contingent resources in the A1 field and in other fields in the southern part of Block 2.

The Company carried out extended flow tests on the J1 well from a 55 foot perforated interval in Basal Sand 1 in the Lower Acacus Formation and a 10 foot perforated interval in the Upper Shoreface in the Lower Acacus Formation. The tests yielded a combined maximum measured flow rate, as restricted by test equipment capability, of approximately 7,307 bopd (gross) of light sweet crude oil and 6.5 mmcf/day (gross) of natural gas through choke sizes on particular intervals ranging from 32/64ths to 96/64ths inch. Measured API gravity of the crude oil ranged from 37 to 40 degrees.

At the request of the NOC, and consistent with earlier test protocols, flow rates were also measured through a smaller more restrictive choke size of 32/64ths inch which yielded oil and gas flow rates of 3,605 bopd and 1.7 mmcf/day (gross), respectively.

To-date, 12 NFW exploration wells and two appraisal wells have tested at a maximum aggregate rate of approximately 109,981 bopd of oil and 106 mmcf/day of natural gas (gross). These wells have been suspended as potential future oil and gas production wells.

K1 and L1-47/02 NFW Exploration Wells Drilled and Cased With Testing

Deferred to Late 2009

The K1-47/02 NFW exploration well (well No. 18) is located in the north-western part of Block 2 approximately 6.3 kilometers south of the I1-47/02 oil discovery. As previously reported, the well was drilled and cased to a final depth of 10,965 feet in the Memouniat Formation after delays were encountered due to poor hole conditions in the bottom section of the well across the Basal Tanezzuft Hot Shale and Memouniat Formations.

Extensive formation evaluation results indicated the presence of hydrocarbons in several basal sands in the Lower Acacus Formation, a highly fractured zone in the Basal Tanezzuft Hot Shale and a sand interval in the Memouniat Formation. From the standpoint of new play concepts, the results in the Basal Tanezzuft are very encouraging because the Tanezzuft Hot Shales contain the organic rich source rocks for hydrocarbons in the Lower Acacus and Memouniat Formations and is a potential oil and gas resource play in its own right.

The L1-47/02 NFW exploration well (well No. 19) is located approximately 5.0 kilometers southeast of the A1-47/02 oil discovery on a four-way dip closed structure identified on the new 2008 2D seismic survey. The well was drilled and cased to a final depth of 10,450 feet in the Tanezzuft Formation. The pre-drill prognosis indicated some potential that the structure could be a southeast extension to the A1-47/02 field.

Extensive formation evaluation results indicated the presence of hydrocarbons in two sand intervals in the Lower Acacus Formation (Basal Sand 1 and Upper Shoreface). In Basal Sand 1, the results indicated an oil column of at least 69 feet to the base of porosity with no evidence of a water oil contact. This leaves open the possibility that the L1 structure could be connected to the A1 field.

The Company expects to flow test the K1 and L1-47/02 wells starting late in the third quarter of 2009 consistent with a reduced work program and budget adopted for 2009.

M1-47/02 NFW Exploration Well Plugged and Abandoned

The M1-47/02 NFW exploration well (well No. 20) is located approximately 5.7 kilometers southeast of the C1-47/02 oil discovery on a four-way dip closed structure identified on the new 2008 2D seismic survey. The well was drilled to a final depth of 9,900 feet in the Tanezzuft Formation.

Extensive formation evaluation results indicated the presence of hydrocarbons in a thin interval in the shallow Aouinet Ouenine Formation. However, the target sands in the Lower Acacus Formation appeared wet based on logs and measured pressure gradients. This disappointing result did not warrant setting the 7 inch production liner and the well was therefore plugged and abandoned. This is the first well the Company has plugged and abandoned in Area 47.

Future Drilling

The Company is finalizing the location of the next NFW exploration well which it expects to spud in late April. Under the revised work program and budget for 2009 as previously reported on March 11, 2009, the Company is targeting to drill up to eight wells in 2009 (including L1 and M1-47/02 wells already drilled) with a one-rig program for the remainder of the year.  


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