Petroceltic Gears Up for Appraisal Ops Offshore Italy

Petroceltic plans to appraise the Elsa discovery well by drilling and testing an Elsa-2 well adjacent to the existing discovery well, Elsa-1, in which a 65m oil column was logged in 1992.

Petroceltic (70% WI and 100% PI for 1st well) assumed operatorship of the B.R268.RG (the Elsa Discovery) on January 28, 2010, following the acquisition of a 30% interest from Vega Oil, a wholly owned subsidiary of Cygam Energy Inc., increasing the Company's total interest in the Elsa discovery to 70%.

An environmental impact assessment for the Elsa-2 well was submitted to the Italian Ministry for the Environment in August 2009 and is currently expected to be approved in 2Q 2010. Drilling operations are planned to commence in September 2010, subject to receiving all necessary regulatory approvals. Situated in 30m of water depth, some 7km offshore in the Central Adriatic region of Italy, the well will be drilled by a zero discharge jackup rig using water-based fluids.

Four suitable rigs with acceptable contract windows have been identified and Petroceltic has commenced discussions with these rig operators with a view to contracting a rig in the near future.

Petroceltic has completed the Elsa-2 well design and identified long lead items for procurement. A screening study has been completed with TRACS International Consultancy Ltd ("TRACS" a subsidiary of AGR Petroleum) to estimate gross contingent in-place and recoverable resources, as well as scoping economic analysis and sensitivities for an offshore development solution, including both fixed platform and floating development options. TRACS has been further commissioned to prepare a Competent Persons Report. This work is currently underway.

The Company may seek to share risk in the drilling of the Elsa appraisal well through a partial farm-out to industry partners or to a mezzanine finance investor.