BOIL.L Regulatory News (BOIL)

9 May 2007 07:01

Gold Oil PLC09 May 2007 For Immediate Release 9th May 2007 Gold Oil plc ("Gold") update on Operations on their Onshore Block XXI Northwest Peru The San Alberto-1X wild cat well was drilled in July/August 2006 to a depth of5,113 feet to explore the Tertiary Verdun sands and the lower fracturedPalaeozoic quartzites both of which produce gas and oil, respectively, in thesurrounding area. The location was decided upon based on an aeromagnetic surveythat showed a major Palaeozoic structural high up-dip of Olympic's La Casita gasfield 20 - 40 Kms to the west and PetroTech's offshore San Pedro oil field 50Kms to the west. It was assumed that this Palaeozoic high would have aconformable Tertiary structure. Logging, drilling results and regional information showed 315 gross feet ofhydrocarbon bearing sands in the Verdun and 250 gross feet of hydrocarbonbearing sands in the Palaeozoic. The decision was taken to production test these hydrocarbon bearing sands inboth the Verdun and the Palaeozoic, but despite many attempts to curb the influxof water from Palaeozoic sands at the base of the well it was not possible toget hydrocarbons to the surface. The well was eventually plugged and abandonedin late November 2006. Following an intensive review of the well results theCompany has drawn the conclusion that the initial influx of water from below theoil water contact in the lower Palaeozoic invaded the hydrocarbon bearing zonesand prevented the recovery of hydrocarbons to the surface. This water influx wasmade worse by the well being shut-in for six weeks while waiting for a largerrig. With eight of the nine criteria required for producing hydrocarbons beingpresent, the only one missing was getting hydrocarbons to the surface, theCompany is very excited about the Block. Since the well was abandoned the Company has been evaluating all the data todecide what to do next. We cannot define the Verdun structure without moreshallow geophysical data as the aeromagnetic survey is only really valid for thetop Palaeozoic. After considerable thought the Company has decided that the bestapproach would be to attempt to define the largest subsurface accumulation ofhydrocarbons in and around the structural high close by the San Alberto 1 wellat the lowest cost possible. Seismic is very expensive and has a long lead timeso the current plan is to run a 245 Km grid of an electromagnetic surface surveyover the target area. The survey consists of transmitting a series of pulse-coded electrical transientsignals into the ground and measuring the voltage response between pairs ofreceiver electrodes. The main advantages over seismic are of identifyinghydrocarbon accumulations rather than structural boundaries and second is thatit is about one sixth the cost of seismic. The technology has been used inRussia and the Caspian area and is similar to that planned to be used after our2D seismic survey in offshore Block Z34. The survey will be carried out by Siberian Geophysical Research DevelopedCompany Ltd who have used it successfully in the FSU over the last ten years.This will be the first time such technology will be used in Latin America andthus may have more risk attached to it than conventional seismic. Following the survey, which should be completed and evaluated with 3 months, theplan is to drill at least one well and possibly two or more in the block.However, this will depend on the results of the survey which may indicate that asmall 2D seismic survey will be needed to totally define a drilling locationbefore drilling. Gary Moore, Managing Director of the Company said that "The use of newtechnology well away from where it has been successfully used is at variance tothe Company's philosophy of being first in but to be second with new technology.However, with all time high manpower and equipment costs in the industry, nevermind availability, we need to acquire as much useful information as possible atas low a cost as possible. At the end of the day we still have to drill a wellto find oil and gas, but if with this Russian technology we can identify thebest location to drill, we could drill a lot of wells for the current cost of amodest 2D seismic survey." The technical information contained in this announcement has been reviewed andapproved by Mike Burchell, B.Sc., 66, member of the SPE and with over 44 yearsexperience in the oil and gas business. Enquiries: Gary Moore Managing Director Tel: +44 (0)1737833597Email: gmoore@goldoilplc.com Mike Burchell Chairman Tel. +44 (0) 1372361772Email: mikeburchell@hotmail.com Roland Cornish Beaumont Cornish Limited Tel: +44 (0) 20 7628 3396 This information is provided by RNS The company news service from the London Stock Exchange