Management Resource Solutions Regulatory News (MRS)

17 Jan 2008 11:19

Melrose Resources PLC17 January 2008 FOR IMMEDIATE RELEASE 17 January 2008 MELROSE RESOURCES PLC Egyptian Exploration Update Melrose Resources plc (LSE:MRS) ("Melrose" or "the Company"), the oil and gasexploration, development and production company, today provides an update on itsexploration programme in Egypt. West Zahira No.1 The EDC-53 rig is currently drilling the West Zahira No.1 well, which wasdesigned to test an exploration prospect located to the north-west of the WestDikirnis oil field. The well encountered gas shows in the Qawasim formation at ameasured depth of 10,070 feet and a 90 foot core was taken within the reservoirsection. The well was subsequently deepened and, after penetrating a highpressure sand interval, had to be sidetracked due to well control issues.Similar to the original wellbore, the sidetrack also encountered gas shows inthe Qawasim and the core and open hole logs indicate a gross gas column of 35feet overlying a water leg. The well data suggest that the well has penetrated the flank of a structurewhich may contain reserves of approximately 60 billion cubic feet ("Bcf") in theQawasim formation. The 3D seismic data also indicate that there is furtherexploration potential in the deeper, underlying Sidi Salim formation and in theQawasim on a geologic trend to the north-east of the well location. An appraisal well is now being planned to prove up the Qawasim reserves in theup-dip area of the West Zahira structure and to test the deeper Sidi Salimpotential. The West Zahira No.1 well will be temporarily suspended pending theresults of the appraisal well. Future Exploration Plans The replacement draw works for the EDC-9 drilling rig have been installed aheadof schedule and the rig has spudded the East Abu Khadra No.1 well to test an AbuMadi prospect with unrisked reserves potential of 50 Bcf and a chance of successof 50%. After concluding operations on the West Zahira No.1 well, the EDC-53 rig willmove to drill the South Tarif No.1 exploration well on a Qawasim prospect whichhas unrisked reserves potential of 140 Bcf plus condensate and a chance ofsuccess of 45%. Two other exploration wells are expected to be spudded in the first quarter of2008, using the newly contracted EDC-54 rig and a shallow drilling unit. In total, Melrose's planned 2008 drilling programme in Egypt contains 14exploration wells to be drilled on the El Mansoura and SE El Mansouraconcessions to test 2 Abu Madi, 6 Qawasin, 1 Tineh and 5 Sidi Salim prospects.The combined unrisked reserves potential of these prospects is estimated at1,200 Bcf of gas and 22 million barrels ("MMbbls") of condensate with an averagechance of success of 34%. These figures assume that the prospects contain gasand condensate only and there is value upside in the prospect portfolio in theevent that oil discoveries are made. The planned expenditure required to pursue the 2008 exploration drillingprogramme in Egypt is $62 million and a further $28 million is budgeted duringthe year to acquire 2D and 3D seismic data over the two concessions. These datawill be used to identify and high grade additional prospects which will bedrilled over the following years. A further $1 million will be used foraeromagnetic data acquisition and geologic studies on the frontier Mesaha blocklocated near the Sudanese border. Commenting on the above, David Thomas, Chief Executive, said: "The results from West Zahira No.1 provide encouragement for our exploration andappraisal campaign in the area around the well and the appraisal well will bepart of a very active 2008 drilling programme which contains several materialexploration prospects in a diverse number of exploration plays. We are steppingup the pace of our exploration drilling with three deep rigs operating in thefirst half of 2008." For further information please visit www.melroseresources.com or contact: Melrose Resources plc David Thomas, Chief Executive 0131 221 3360Robert Adair, Executive ChairmanMunro Sutherland, Finance Director Buchanan CommunicationsTim Thompson 0207 466 5000Ben Willey This information is provided by RNS The company news service from the London Stock Exchange