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2 Mar 2009 07:00
2nd March 2009
CIRCLE OIL PLC
("Circle" or the "Company")
Operating Update
First Oil Production Commences in Egypt
Circle Oil plc (AIM:COP), the international oil and gas exploration, development and production company is pleased to announce its first oil production in Egypt. Having obtained the necessary agreements from the Egyptian General Petroleum Corporation (EGPC) and completed the required production engineering facilities, initial production commenced in the Al Amir Development Lease area in the NW Gemsa Permit in the last few days.
Production commenced at approximately 1450 BOPD and is expected to reach a daily average rate of approximately 3000 BOPD in the short term. This oil output is being produced from the discovery well Al Amir SE-1X and the first appraisal well Al-Amir SE-2X. Updates on production figures will be announced in due course once production has stabilised. The initial oil produced was transported by truck to the Gazwarina facilities but it is now being piped to the facility following connection of the two wells and laying of a 7 kilometre tie-in pipeline.
Further plans, in the process of finalisation, include bringing into production the Al-Amir 1 well where the Company recently announced the discovery of an additional oil bearing zone. The partners also intend to increase the daily production capability from both of the Al-Amir SE wells.
Exploration Well Shehab-1
Upon completion of the Al Amir SE-2X appraisal well, the drill rig Muburrak-1 was moved to drill a further exploration well in the N W Gemsa Permit named Shehab-1. This relatively shallow exploration well ( T.D. 6452 feet) was designed to drill targets in a part fault and part dip defined prospect containing the Belayim and Kareem Formations. This well has now been drilled and open hole logged. Log interpretation indicated that the Kareem Formation is likely to be water bearing at the target levels, but the interpretation also indicated the possibility of significant hydrocarbon bearing sandstones in the middle Belayim with 22 feet of net pay. The decision was taken not to test these sandstones in this location, but to drill them in a future well in an updip position. The exact timing for this updip drilling has yet to be decided.
The drilling rig is now moving to drill a second exploration well named Geyad-1 in the permit. This well is structurally and geologically similar prospect to the Shehab well with the same targets in the Belayim and Kareem sandstones. Following completion of this second exploration well, the rig is currently scheduled to move back to the Al Amir Development Lease area to drill a second appraisal well there, Al-Amir SE-3X.
The NW Gemsa permit covers an area of over 400 square kilometres and lies about 300 kilometres southeast of Cairo, in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production licence of 20 years, plus extensions, in the event of commercial discoveries. The Al Amir Development Lease is a designated production lease covering an area of 36 square kilometres within the boundaries of the NW Gemsa permit. The North West Gemsa permit partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil plc (40% interest); and Premier Oil plc (10% interest).
Glossary
BOPD Barrels of Oil Per Day
T.D. Target Depth.
Commenting on the announcement David Hough, CEO Circle Oil, said:
"Today's announcement is a very significant step forward for Circle as we now have become both an oil and a gas producer. The Circle share of this initial production marks the start of significant earnings and cash flow for the Company. It further reinforces and confirms the company's decision to balance its exploration strategy to seek out and deliver on lower risk prospects with good short term earnings potential. It is our intention to increase production from the Al Amir Development Lease both through the existing wells and by drilling successful additional appraisal wells.
We are also very pleased to have logged potentially significant hydrocarbons in our latest exploration well, Shehab-1, in Egypt. We look forward to drilling this prospect at an updip location in the future."
In accordance with the guidelines of the AIM Market of the London Stock Exchange, Professor Chris Green, Chief Operating Officer of Circle Oil plc, an explorationist and geophysicist with over thirty years oil & gas industry experience, is a qualified person, as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies, who has reviewed and approved the technical information contained in this announcement. Professor Green has relied on information supplied by the operator in carrying out his review.
For further information contact:
Circle Oil plc (+44 20 7638 9571)
David Hough, CEO
Collins Stewart Europe Limited (+44 20 7523 8350)
Adrian Hadden
Fox-Davies Capital (+44 20 7936 5230)
Daniel Fox-Davies
Citigate Dewe Rogerson (+44 20 7638 9571)
Martin Jackson
George Cazenove
Notes to Editors
Circle Oil Plc
Circle Oil Plc (AIM: COP) is an international oil & gas exploration and development Company with an expanding portfolio of assets in Morocco, Tunisia, Oman, Egypt and Namibia with a combination of low-risk near-term production and significant exploration upside potential. The Company listed on AIM in October 2004.
Internationally, the Company has continued to expand its portfolio over the past 2 years and now has assets in the Rharb Basin, Morocco; the Ras Mamour Permit in southern Tunisia; the Mahdia Permit offshore Tunisia; the Grombalia Permit in northern Tunisia; the Zeit Bay area of Egypt and the Owambo Basin, Namibia. Circle also has the largest licence holding of any Company in Oman. In addition to its highly prospective Block 52 offshore, the Company also has an ongoing exploration program in Block 49 onshore.
The Company's strategy is to locate and secure additional licenses in prospective hydrocarbon provinces and through targeted investment programmes, monetise the value in those assets for the benefit of shareholders. This could be achieved through farm-outs to selected partners who would then invest in and continue the development of the asset into production, or Circle may itself opt to use its own expertise to appraise reserves and bring assets into production, generating sustained cash flow for further investment.
Further information on Circle Oil is available on its website at www.circleoil.net
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