Management Resource Solutions Regulatory News (MRS)

3 Jul 2008 07:00



MELROSE RESOURCES PLC 

Exploration and Appraisal Drilling Update 

Melrose Resources plc (LSE:MRS) ("Melrose" or "the Company"), the oil and gas exploration, development and production company, today announces a successful appraisal well in the USA and provides an update on its exploration and appraisal programme in Egypt. 

USA 

In East Texas, the Holmes No.4 well has been successfully drilled to appraise the Van Reit formation at a location to the southwest of the main producing Holmes field. The well reached a total depth of 10,197 feet and encountered the top reservoir at 9,820 feet where strong gas shows were experienced whilst drilling. Open-hole logs confirmed the presence of a net gas pay interval of 29 feet with an average porosity and water saturation of 21% and 28%, respectively. The reservoir pressure indicates that the discovery area has not been depleted by production from the main field. 

The discovery is estimated to contain probable reserves of 10.2 Bcf and it will be completed and tied back for production within the next two months. 

Egypt

Ar Rub No.1 

The Ar Rub No.1 exploration well has been drilled to test a deep Sidi Salim exploration play in the northern area of the South East El Mansoura concession. The well reached a total depth of 10,300 feet and open-hole logs suggest that two potential reservoir intervals were encountered within the target formation. The upper interval has an apparent net pay of 53 feet with an average porosity and water saturation of 21% and 35%, respectively, and the lower interval has 10 feet of net pay with a porosity and water saturation of 10% and 43%, respectively.

The potential reservoir intervals comprise a mixture of carbonates and sandstones which have not previously been tested on the concession and the wellbore conditions did not allow conclusive open-hole log data to be obtained. Therefore, the well is being prepared for testing to confirm whether the two zones will produce at commercial flow rates. Melrose's pre-drill unrisked reserves estimate for the prospect of 90 Bcfe is unchanged pending the well test results. 

Qantara No.4 Sidetrack 

The Qantara No.4 well has been sidetracked to determine whether production can be re-established from the shut-in Qantara field. The well reached a total depth of 10,454 feet and encountered a net pay interval of 11 feet with an average porosity and water saturation of 17% and 50%, respectively. The well has been cased prior to production testing.

  East Sindy No.1

The East Sindy No.1 exploration well has been drilled to test a shallow Sidi Salim prospect in the northern area of the South East El Mansoura concession. The well reached a total depth of 7,300 feet and, although it intersected a thick net sand interval of 400 feet, it had no commercial hydrocarbon shows. The well has therefore been plugged and abandoned.

Future Drilling Plans

Following the completion of operations on the Ar Rub No.1 well, the EDC-54 drilling rig will move to the West Dikirnis field to sidetrack the West Dikirnis No.7 well and recomplete it as a high-capacity, horizontal oil production well. 

The EDC-9 rig will move from the Qantara field to drill the West Zahayra No.2 well in the El Mansoura concession. This well will appraise the up-dip area of the Qawasim discovery made by West Zahayra No.1 and will also test a deeper Sidi Salim exploration target which has unrisked reserves potential of 165 Bcfe with an estimated chance of success of 45%. 

The ECDC-1 rig will be used to drill the Ghizala No.1 well on a recently identified Sidi Salim prospect in the South East Mansoura concession. The prospect lies on trend with Ar Rub and the Tamad oil field which is currently producing 1,100 bopd.  Ghizala has unrisked reserves potential of 2 MMbbls of oil with an estimated chance of success of 26%.

Seismic Acquisition 

The seismic acquisition programme which commenced in March 2008 on the South East El Mansoura concession is progressing well. To date, 712 km of 2-D seismic data and 269 km² of 3-D seismic data have been acquired, with a further 486 km² of 3-D data still to be acquired.

The preliminary interpretation of the seismic data is encouraging and 10 good quality leads and prospects have been identified in the Tertiary formations and a further 16 in the older Cretaceous and Jurassic formations. In light of these results, Melrose is considering extending the 3-D seismic survey area to cover more of the concession later this year. 

Commenting on the above, David Thomas, Chief Executive, said: 

"We are very pleased with the results from the Holmes No.4 well, which demonstrate that there is still significant untapped potential in this mature producing area. We are keen to pursue our exploration programme there later this year when we plan to drill two deep gas prospects. The Ar Rub No.1 well in Egypt also appears interesting and we look forward to flow testing the well over the next few weeks."

For further information please visit www.melroseresources.com or contact:

  Glossary:

Bcf - billion cubic feet of gas 

Bcfe - billion cubic feet of gas equivalent 

bpd - barrels of oil or condensate per day

bopd - barrels of oil per day

boepd - barrels of oil equivalent per day 

MMbbls - million barrels of oil or condensate 

MMcfpd - million cubic feet per day