Emerald Energy Regulatory News (EEN)

5 Feb 2008 07:00

Emerald Energy PLC05 February 2008 Emerald Energy Plc 5 February 2008 Khurbet East Field Development, Block 26, Syria Emerald Energy Plc ("Emerald" or the "Company") would like to provide thefollowing update on activities in Block 26, Syria. Field Development : The Syrian Ministry of Oil and Mineral Resources and the Syrian PetroleumCompany have granted approval for commercial development of the Khurbet EastField. Field development is intended to commence immediately and establish earlyproduction from the shallow Cretaceous Massive reservoir ("Massive Reservoir")as soon as an Early Production Facility ("EPF") can be installed at Khurbet Eastfield. An EPF capable of processing some 10,000 barrels per day is expected tobe operational by the fourth quarter of 2008 and to be followed by the FullField Development ("FFD") facility installation. Engineering and construction ofthe EPF is scheduled to commence this quarter. Production through the EPF willprovide valuable information about reservoir performance that will be used tooptimise the design of the FFD facilities. The Company's share of costs for the first phase of development, consisting ofthe construction and installation of the EPF and the drilling of up to threewells, is planned to be met from the Company's cash flow. The FFD costs,including future development wells within the Massive Reservoir, are anticipatedto be met from the cash flows expected to be generated by early production fromthe field. The Khurbet East oil field was discovered in the second quarter of 2007 with theKhurbet East No.1 well which recovered an oil sample from the Massive Reservoir.Two appraisal wells have since been drilled and tested, with Khurbet East No.2flowing 710 barrels of oil per day from a 10 metre section and Khurbet East No.3flowing 3,420 barrels of oil per day from the full section of the MassiveReservoir. Reserves : An independent estimate of the petroleum reserves of the Khurbet East field hasbeen completed by RPS Energy Ltd ("RPS") of London. The standard used by RPS inpreparing its estimate was the resource definitions jointly set out by theSociety of Petroleum Engineers (SPE), the World Petroleum Congress (WPC), theAmerican Association of Petroleum Geologists (AAPG) and the Society of PetroleumEvaluation Engineers (SPEE) in April 2007 in a document entitled "PetroleumResources Management System" (PRMS). The gross life-of-field Proved plus Probable Reserves of oil contained in theMassive Reservoir are estimated to be 65.6 million barrels as at 31 December2007. The Company's has a 50% working interest in the Contractor group. Under theterms of the Contract, the net entitlement Proved plus Probable Reserves of oilattributable to the Company, based on the oil futures price of 4th of January2008, is 11.3 million barrels after the application of royalties and other termsof the Contract including the apportionment of Cost Recovery Crude Oil andProduction Sharing Crude Oil. The Company's liability for income taxes in Syria,related to the Khurbet East field, is paid on behalf of the Company out ofrevenue from the Syrian Petroleum Company's share of oil produced from thefield. Emeralds' Chief Executive Officer, Angus MacAskill, said: "We are delighted to receive approval for the commercial development of theKhurbet East field and also with the results of the independent reservesevaluation for the Massive formation. We have been very pleased by the excellentco-operation and support that has been received from both the Syrian Governmentand Syrian Petroleum Company and we look forward to our future partnership inthe joint operating company." Emerald holds a 50% interest in Block 26 through its fully owned subsidiary SNGOverseas Ltd. Enquiries: Lisa Hibberd 020 7925 2440 Notes : 1. Reserves are those quantities of petroleum anticipated to be commerciallyrecoverable by application of development projects to known accumulations from agiven date forward under defined conditions. 2. Proved Reserves are those quantities of petroleum, which, by analysis ofgeoscience and engineering data, can be estimated with reasonable certainty tobe commercially recoverable, from a given date forward, from known reservoirsand under defined economic conditions, operating methods, and governmentregulations. 3. Probable Reserves are those additional Reserves which analysis ofgeoscience and engineering data indicate are less likely to be recovered thanProved Reserves. It is equally likely that actual remaining quantities recoveredwill be greater than or less than the sum of the estimated Proved plus ProbableReserves (2P). In this context, when probabilistic methods are used, thereshould be at least a 50% probability that the actual quantities recovered willequal or exceed the 2P estimate. 4. Full reserve category definitions and guidelines are documented in thePRMS on the SPE website at http://www.spe.org/spe-app/spe/industry/reserves/prms.htm This information is provided by RNS The company news service from the London Stock Exchange