Cirrus Snaps Up Stake in Offshore Netherlands License, Pipeline Connection

Cirrus Energy Nederland, as operator of the L8-D Group, has acquired a 25.479% interest in the L11b license, L11b-A gas field, platform and pipeline connection to the NGT trunk pipeline system from the L11b Group which was operated by Chevron Exploration and Production Netherlands B.V. The consideration for the acquisition is an overriding royalty over the gross revenues arising from any future natural gas and condensate sales from the L11b-A field plus the assumption of the future abandonment liabilities for the L11b-A platform and wells which are estimated as approximately (euro) 5.0 million net to Cirrus' interest. All necessary government approvals for the transfer of the interest and operatorship have been received.

The L8-D field area has been unitized and equity interest partners in the L8-D Group are Cirrus (operator and 25.479%), TAQA Energy B.V. (15.000%), DSM Energie B.V. (2.880%), Energy06 Investments B.V. (1.341%), EWE AG (13.400%) and EBN (41.900%). The L11b-A platform and pipeline will be used for the development of the L8-D field which was successfully appraised by the L11b-A06 well (previously called L11-13) drilled by the L8-D Group. The L11b-A06 well was completed in February, 2009, and tested at a maximum stabilized flow rate of 820,000 Nm3/day (30.6 million standard cubic feet per day or MMscf/d) on an 48/64" choke at a flowing wellhead pressure of 200 bar (2,900 psig).

Production from the nearly depleted L11b-A field has been shut-in and modifications to the existing process equipment are underway to allow for the tie-in of the L11b-A06 well. This is expected to be completed in the fourth calendar quarter of 2009 at which time L8-D field production is expected to commence from the L11b-A06 well. A second L8-D field appraisal/development well is planned to be drilled from the L11b-A platform during late calendar 2009 which, if successful, is expected to be in production during early calendar 2010.

Whilst Cirrus remains the legal operator of both the L11b license and future drilling and development activities, it has been agreed that production operations on the L11b-A platform will be managed by TAQA Energy B.V. on behalf of the L8-D Group partners. This arrangement benefits all parties by using TAQA's established offshore operating capabilities and infrastructure in The Netherlands and facilitates the earliest possible start of production from the L8-D field.

Cirrus President and CEO David Taylor commented, "Closing of this acquisition in a timely manner is a significant achievement given the complexities and regulatory requirements of transferring operatorship of a manned, offshore production platform to new owners. Ownership and control of the existing platform and infrastructure allows for the most rapid and cost effective development of the L8-D field which will be a significant milestone for Cirrus. We are also pleased that we have been able to conclude an arrangement with TAQA for their management of the production operations on the L11b-A platform which we see as mutually benefitting all parties."