Petroceltic Encouraged by Increased Flow Rates in Algeria

Petroceltic, in association with its partner Sonatrach, the Algerian National Oil & Gas Company, announced that:

• Continued testing on well AT-1, on the Isarene permit (Blocks 228 & 229a), Algeria, following fracture stimulation (“fracturing”) has resulted in flow rates increasing substantially from those previously reported, to a maximum of 33.78 mmscf/d*.
• Drilling on the AT-2 well has logged a gas column in excess of 100 meters. The Company plans to test the AT-2 well following completion of testing on the INE-2 well drilled earlier this year.
• Scheduling for the drilling for the AT-3 well to delineate further the significant commercial potential of the Isarene permit has been brought forward. Analysis of the pressure build up data from the original AT-1 well test suggested that well performance had been hampered by seepage of drilling materials into the objective reservoir during the drilling process. Mechanical fracturing of the Ordovician (Unit IV) reservoir was therefore used to bypass the zone impacted by drilling materials to obtain a more accurate analysis of the well's potential.

At a flow rate of 33.78 mmscf/d, the wellhead pressure was 1,464 PSIG on a 80/64" choke setting, and at a rate of 12.14 mmscf/d, well head pressure was 2,295 PSIG on a 32/64" choke setting.

The maximum flow rate from the well was constrained by the pressure and volume rating of the well testing equipment available in the field, due to flow rates being in excess of expectations. Engineering estimates suggest that this well would be capable of flowing at rates in excess of 40 mmscf/d gas on a 2" (or 128/64") choke setting if adequate surface testing facilities had been available.

Testing and sampling operations at the AT-1 well have now been completed and the well testing crew is now moving to flow test well INE-2. Well AT-1 has been completed for possible future use as a production well.

The AT-1 well is the second well in the current drilling program on the Isarene permit in the Illizi basin, Algeria. This successful post fracturing test demonstrates the potential of this process to enhance productivity in Ordovician reservoirs and further underscores the high gas potential of the Ain Tsila ridge discovery at this location. The well was drilled by Petroceltic (75% interest, Operator) in association with the Algerian Oil & Gas Company Sonatrach (25% Interest).

The AT-2 well, the second on the Ain Tsila field, has now completed drilling, and a liner has been set over the objective Ordovician formation. A gas column of in excess of 100 meters was logged and formation pressure measurements indicated that the gas observed at this location was in the same pressure regime as the gas in well AT-1. The drilling rig will now move to the AT-3 location, which is approximately 9 km south of the AT-2 location, to continue the exploration of the Ain Tsila Ridge structure.

Brian O'Cathain, Chief Executive of Petroceltic, commented, "The updated AT-1 result is exciting, with substantially higher flow rates that confirm the significant commercial potential of the Isarene permit to Petroceltic and our partner Sonatrach. The additional testing has given us a more accurate picture of the flow potential of this area of the Ain Tsila Ridge structure. We are also greatly encouraged by the logging of a 100 meter gas column in the AT-2 well and look forward to testing this in the near future. We have rescheduled our drilling program, bringing the AT-3 well forward, to delineate further the extent of this potentially large discovery."