Management Resource Solutions Regulatory News (MRS)

11 Dec 2006 07:01

Melrose Resources PLC11 December 2006 FOR IMMEDIATE RELEASE 11 December 2006 MELROSE RESOURCES PLC Update on drilling activity and field developments in Egypt Melrose Resources plc (LSE: MRS), the exploration and production company withinterests in Egypt, Bulgaria, France and the USA, today gives the followingupdate of exploration and development activity on the El Mansoura Concessionlocated in the Nile Delta in Egypt. Melrose has a 100% working interest in theEl Mansoura Concession. Drilling activity The West Dikirnis No.4 appraisal well was drilled to prove the presence of oildowndip to the north of the proven West Dikirnis structure. Around 52 ft of oilbearing reservoir was successfully encountered: this was above expectations andwill confirm a large increase in the proven reserves volume and, possibly, totalreserves. The well has now been successfully tested. Four flow periods ofincreasing choke sizes were carried out and a maximum oil rate of 1,930 bopd wasachieved on a 32/64th choke at a well head pressure of 1,550 psi. The well holdsfurther potential: the top section of the reservoir, which exhibited excellentcharacteristics, was not perforated in order to avoid premature gas cap coningbut perforations can be added in the future to increase production. The well hasbeen temporarily shut-in as a planned producer and the rig will be released tomove on to the West Dikirnis No.7 step-out appraisal well. The West Dikirnis No.2 well has been retested as the initial test of 2,200 bopdthrough a 24/64th choke at a well head pressure of 1,960 psi was limited by thetest facilities. The well flowed 5,075 bopd on a 51/64th choke at a well headpressure of 1,658 psi. This test confirmed the exceptional productivity of thewell and the reservoir in this part of the field. The West Khilala No.4 development well was drilled as a production well near thecrest of the West Khilala structure in the Qawasim formation. The well reachedTD at 10,400 ft and the target reservoir was encountered on prognosis with 92.5ft of clean gas-bearing reservoir and with the gas/water contact in line withthe two previous wells in the field. Reservoir qualities are very similar to theearlier wells drilled. The well is currently being completed and will then betested and ready for production. The rig will then move to drill a further WestKhilala appraisal well. A number of step-out appraisal well locations, away fromthe central part of the structure, are planned over the next few months with theobjective of increasing the proven reserve volumes in the field. On the El Tamad oil field, the El Tamad No.7 appraisal well was drilled to 7,100ft and has been tested and completed as a producer. The target oil zone in theSidi Salim formation was encountered on prognosis. The well was perforated andflowed at 860 bopd and 870 Mcfpd on an 18/64th choke with a well head pressureof 1,372 psi. The El Tamad No.4 appraisal well was then drilled. Two separatepay intervals were identified and this well has been perforated and tested. Thewell flowed at 866 bopd and 182 Mcfpd on an 18/64th choke at a well headpressure of 1,167 psi. These two wells extend the successful development of theTamad field and will be put on production. The SW Nabarouh No.1 exploration well, targeting the Qawasim formation, wasdrilled to a depth of 9,700 ft. Reservoir rock, which was found in a number ofzones, contained only water and the well has been plugged and abandoned. The Dimyarah No.1 exploration well was drilled with dual targets of an amplitudeanomaly in the shallow Kafr El Sheik formation and a deeper structure in the AbuMadi. The Abu Madi objective was not successful but the well encountered around41 ft of section in the Kafr El Sheik and was tested at 6.6 MMcfpd on a 24/64thchoke and a well head pressure of 2,019 psi. Some of the remaining Kafr El Sheiksection has been identified as having low-resistivity characteristics. Along-term production test is planned to provide further information about thisreservoir. This unconventional reservoir is widely present on the concession anda successful test here would have favourable implications for reserve potentialelsewhere. Field development activity On the West Khilala development project, the development site is complete andconstruction is underway. The main items of process equipment are now en routeand the development is on schedule for first production in the first quarter of2007. Initial gross production volumes are expected to be at least 40 MMcfpd buta production level of 80 MMcfpd is targeted by the second quarter of 2007. Engineering design is well advanced on the West Dikirnis development project andthe main construction contracts have now been awarded. The development is onschedule for first production in the third quarter of 2007 at a target grossfield production rate of 10,000 bopd. The production facilities are beingdesigned to accommodate the larger volumes which should result from continuingsuccess in appraisal drilling over the next few months. Development of the Salaka gas field is underway with first production expectedin the first quarter of 2007 at a rate of around 9 MMcfpd. A further well may bedrilled in this area in 2007. The Turbay No.1 and Tummay No.1 wells have now been hooked up to the El Tamadfacilities and will shortly start producing with combined potential of around 15MMcfpd and 100 bcpd. The Rawdah No.1 gas well has now been connected to the South Mansoura facilitiesand is expected to start production at around 10 MMcfpd after final approvalshave been received. On the South Batra field, remedial work on the South Batra No.14 well hasreduced the water rate and restored gas production. This technique may beapplicable to other wells in the field. In addition, a full geological andreservoir engineering study is underway to better understand the field reservoirextent and characteristics. The results of this will become available over thenext few months and will influence drilling strategy and remedial works in thisfield in 2007. Commenting on this, Robert Adair, Executive Chairman, said: "Our drilling success rate continues to be very impressive. The successfulexploration wells set up further plays and drilling locations for next year andthe success of the West Dikirnis No.4 oil well is very significant in terms ofadding to our proven reserve base. It is also important as it has added to ouroil reserves. The successful West Khilala No.4 well has confirmed our confidencein this impressive field. Our explorationists are currently starting to interpret the recently-processed3-D over the central and southern area of the El Mansoura concession and further3-D acquisition is planned for 2007. I remain confident that there issignificant exploration upside remaining on the concession, both in unexploredareas and in deeper horizons. I am encouraged that our development projects areon track - these are set to bring a major increase in production through 2007." For further information please contact: Melrose Resources plcRobert Adair , Executive Chairman 0131 221 3360Munro Sutherland, Finance Director Buchanan CommunicationsTim Thompson 0207 466 5000Ben Willey or visit www.melroseresources.com Glossary:bpd - barrels of oil or condensate per daybcpd - barrels of condensate per daybopd - barrels of oil per dayMcfpd - thousand cubic feet per dayMMcfpd - million cubic feet per day This information is provided by RNS The company news service from the London Stock Exchange