Management Resource Solutions Regulatory News (MRS)

19 Dec 2008 07:00



Melrose Resources plc

Drilling Update

Melrose Resources plc (LSE: MRS) ("Melrose" or "the Company"), the oil and gas exploration, development and production company, today provides an update on its drilling operations.

Bulgaria

In late October 2008, Melrose announced the results of the successful Kavarna No.1 exploration well, which made a gas discovery in the Black Sea, offshore Bulgaria. The well encountered a well developed, gas bearing Paleocene reservoir formation and the initial reserves estimate for the discovery was 24 Bcf. Prior to running open hole logs a strong gas influx occurred into the wellbore and for safety reasons it became necessary to plug and re-drill the well. 

The replacement well, Kavarna No.2, has now been drilled and encountered 125 feet of net gas pay with an average porosity of 27%. These new well data have confirmed the initial reserves estimate. 

The Kavarna discovery is located approximately 7 kilometers to the east of the Melrose operated Galata gas field and 8 kilometers to the west of the Kaliakra discovery announced in early 2008. Given Kavarna's close proximity to the Galata field, the Kavarna No.2 well is currently being completed with a sub-sea tree to enable the well to be tied back to the Galata field facilities for production in the third quarter 2009. The Kaliakra discovery, which contains estimated reserves of 47 Bcf, is scheduled to be tied back to the Galata facilities for first production in 2010. 

Egypt

In Egypt, the North Dikirnis No.1 exploration well has been successfully drilled by the EDC-54 rig a on a prospect located approximately 3 kilometers north of the West Dikirnis field. The well reached a total depth of 9,000 feet and encountered 29 feet of net pay in the Qawasim formation with an average porosity of 23%. The well was flow tested at a rate of 7.7 MMcfpd of gas with 244 bpd of condensate and the initial reserves estimate for the discovery is in the range 3 Bcfe to 5 Bcfe. Similar to Melrose's other recent discoveries in the Nile Delta, North Dikirnis No.1 will be tied back to existing facilities for production and is expected to come on stream in 2009.

The EDC-54 rig has now moved to drill the East Dikirnis exploration prospect in the El Mansoura concession which has unrisked reserves potential of 49 Bcfe with an estimated chance of success of 48%. 

The EDC-9 rig has completed operations on the West Dikirnis No.7 well which is the first horizontal oil producer to be drilled in the West Dikirnis field. The well reached a total depth of 11392 feet and an 810 feet long horizontal section was successfully drilled within the oil rim reservoir. The well is currently being tied back for testing and long term production and the EDC-9 rig is moving location to drill West Dikirnis No.10 as the second horizontal development well in the field.

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

"We are pleased with the results from the Kavarna No.2 well, which confirm that the discovery has excellent reservoir quality and a net pay interval over 50% thicker than previously encountered in the area. This bodes well for the remaining exploration potential on the Galata-Kaliakra geologic trend. The North Dikirnis No.1 well results in Egypt are also positive and we look forward to bringing the well on stream next year to provide incremental production volumes."

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Glossary:

Bcf - billion cubic feet of gas 

Bcfe - billion cubic feet of gas equivalent 

bpd - barrels of oil or condensate per day

boepd - barrels of oil equivalent per day 

Mbbls - thousand barrels of oil or condensate 

MMcfpd - million cubic feet of gas per day