Management Resource Solutions Regulatory News (MRS)

22 May 2006 13:16

Melrose Resources PLC22 May 2006 FOR IMMEDIATE RELEASE 22 May 2006 MELROSE RESOURCES PLC Drilling results in Egypt Melrose Resources plc today announces the results of recent exploration activityin Egypt. The West Khilala No.2 well has been drilled to a depth of 10,400 feet using thePD-104 Rig. The Abu Madi Level II reservoir section was encountered high toprognosis and was cored. A single sand interval was encountered from 9,925 ft to10,090 ft and the gas/water contact established at 10,053 ft giving a grosshydrocarbon column of 128 ft (122 ft net). Wireline sampling and pressures haveconfirmed the fluid contact. The log data are being incorporated into are-evaluation of the field and four further appraisal drilling locations will beidentified as a matter of priority. The gas reserve estimate will be updatedfollowing testing and it is very likely that the reserves will be increased as aresult of this well. Questions over the sizing of the production facilities,required to produce the increasing estimates of reserves, have delayed thedevelopment but we have now committed to an 80 MMcfpd process start up facilityand capacity can be increased in units of 40 MMcfpd as required. The West Dikirnis No.2 well has been drilled to a depth of 8,570 ft using theEDC-09 rig. The whole of the Qawasim reservoir section was cored and a singlesand unit was encountered from 8,266 ft to 8,415 ft (149 ft gross). The intervalfrom 8,266 ft to 8,398 ft (138 ft) is a hydrocarbon charged reservoir with thewater contact interpreted at 8,398 ft. The West Dikirnis No.1 discovery wellencountered three reservoir units with total net pay of 101 ft. The high liquidhydrocarbon yields expected from this field make the planning of productionfacilities more complicated and the test results from the No.2 well will provideimportant information for the sizing of the process plant. The ECDC-1 rig has been moved to the SW Tamad No.1 location and is expected tospud the well shortly. The well is targeting an anomaly in a fault blockadjacent to the producing El Tamad structure. Commenting on this, Robert Adair, Chairman, said: "The West Dikirnis and West Khilala appraisal wells have both deliveredexcellent results. In both wells we have encountered thicker and betterreservoir sections than the original discovery wells which should work throughto sizable reserves additions. In both cases, the identification of furtherseismic anomalies on trend with these discoveries is well advanced. In the shortterm we will be putting effort into the evaluation of further appraisal/development locations for these fields. It is very significant that the initial interpretation of the new 3-D seismicdata acquired over the last fifteen months is now being reflected in our recentexploration success. We are now able to target prospects which are deeper andlarger than the more obvious but relatively small Pliocene anomalies on which wehad previously largely concentrated. We will now be extending our interpretationof the new 3-D seismic over the east of the concession where a large area isstill relatively unexplored. I expect our exploration programme to gain furthermomentum and I am confident of continuing exploration success in 2006. Following completion of the proposed acquisition of Merlon Petroleum and theassumption of operatorship of our Egyptian interests a key objective for Melrosewill be to access higher gas prices. With the increased reserve and productionpotential on our concessions our goal will be to obtain pricing for newdiscoveries based on a netback of LNG prices which will give a significantpremium over our current gas sales price in Egypt which is $2.50-$2.65 per Mcf." For further information please contact: Melrose Resources plc Robert Adair , Chairman 0184 553 7037 David Curry, Chief Executive 0131 221 3360 Munro Sutherland, Finance Director 0131 221 3360 Chris Thomas, Corporate Development Director 0207 462 1603 Buchanan Communications Tim Thompson 0207 466 5000 Ben Willey or visit www.melroseresources.com This information is provided by RNS The company news service from the London Stock Exchange