Vanoil to Launch Kenyan Seismic Program During 3Q

Vanoil announced that its 2010 seismic and gravity program in Block 3A will be undertaken in the third quarter of 2010. Block 3A is part of the 25,000 square km, 100% PSC Vanoil concession in Kenya that is equivalent in size to the 8 billion Suez oil field (Egypt) or the 2 billion oil field of Lake Albert (Uganda). The program approximately 324 line km of 2D seismic will target a zone of highly prioritized Cretaceous structural leads that will be matured to drillable prospects. The leads exhibit closure, amplitude anomalies and strong energy attributes. Vanoil will contract a highly specialized geophysical company among three companies that forwarded their proposals to Vanoil in late 2009 to undertake the 2010 seismic program. The preferred energy source for seismic acquisition will be Vibroseis at 80 fold coverage. A rigorous gravity, uphole and LVL refraction survey will concurrently run with the seismic survey. The crew mobilization to Block 3A is expected to commence in the month of May, 2010 and actual field data acquisition to commence in the months of July-August 2010. The final results after data processing and interpretation is expected before the end of 2010. Estimated cost of the 2010 Vanoil seismic program is approximately USD 4.8 million.

Vanoil has entered its third contractual year in Block 3A petroleum exploration under 100% Production Sharing Contract (PSC). The initial exploration period of four years will terminate in October, 2011 and Vanoil plans drilling of one exploratory in Block 3A in 2011.

Block 3A property is located in the petroleum system fairway of the vastly unexplored region in East African Rift basins. Two rift basins (Anza & Mochesa) converge in Block 3A acreage with different petroleum plays.

The Anza Graben portion of Block 3A constitutes the southeast termination rift segment of the prolific Cretaceous Central Africa Rift System (CARS) in Kenya. During the Cretaceous, block 3A area was the site of low energy fluvial-lacustrine depositional system resulting in accumulation of thick (locally less than 4,000m) Cretaceous sediments. Source rocks kitchen zones are expected in the Cretaceous formation in Block 3A and would include highly sourcing potential lacustrine shales and clays deposited in the deep Cretaceous lakes similar to the Muglad rift basin. Further, mappable seismic banding in the Cretaceous formation in Block 3A indicates the possibility of the reservoir and source/seal facies of a working petroleum system as observed elsewhere in the CARS specifically in Muglad and Melut basins in Southern Sudan.

The 2010 seismic program will target leads that are connected to possible Cretaceous kitchens in Block 3A. Recovery of oil in Sirius-1 well in Chalbi basin (sub-basin in Anza graben) located in the northern Anza graben proved a Cretaceous working petroleum system in the Anza Graben. In general potential hydrocarbon trapping mechanisms in Block 3A are similar to the Muglad basin and include tilted fault blocks closures, positive flower structures (Albertine type), faulted anticlinal closures and stratigraphic traps.

The leads identified in Block 3A & 3B have similarity to producing geological structures in Muglad, Melut and Albertine basins. (CNOOC) China National Offshore Oil Company, The Taiwanese Oil Company and Africa oil are currently testing the generation and entrapment of hydrocarbons in such structures in Block 09. The Bogal-1 in Block 09 well (approximately 60-90 km from Block 3A) is now progressing slowly at depth 4,200m (01-2-10) most likely still testing the Cretaceous stacked closures heading for the main target the Jurassic carbonate reef reservoir.