Management Resource Solutions Regulatory News (MRS)

8 Dec 2005 07:00

Melrose Resources PLC08 December 2005 FOR IMMEDIATE RELEASE 8 December 2005 MELROSE RESOURCES PLC Drilling results in Bulgaria and Egypt Melrose Resources plc today announces the results of recent drilling activity inBulgaria and Egypt. In Bulgaria the Samotino No.2 exploration well on Block Kaliakra 99 was spuddedon 16th November 2005 and drilled to a depth of 6,760 ft. The well encounteredgood gas and live oil shows while drilling in the Eocene section withhydrocarbon saturations over 50% recorded. While a 16 ft gas interval wasidentified, this was not considered worth testing and the well will be pluggedand abandoned. The area will be remapped using the data obtained with emphasison the up-dip section of the channel as the well appears to have been drilledthrough a transition zone. The results of the Samotino No.1 and No.2 wells confirm the presence of a veryactive hydrocarbon system (both oil and gas) in the area together with goodreservoir sections in the target intervals. Some work has already been done onthe Samotino No.1 well data and there appears to be a strong probability thatthere is a good trap up-dip to the west where the Oligocene channel sequencepinches out. The location is in the shallow waters on our Kaliakra 99 Concessionclose to the coast but is not currently covered by 3-D seismic. The data fromboth wells will be reviewed further over the coming months and the resultsincorporated in a re-interpretation of the seismic in this area. In Egypt, the West Khilala No.1 exploration well was drilled to a depth of11,250 ft. The logs over the Abu Madi interval indicated a gross gas filledinterval from 9,924 ft to 10,046 ft with no water contact and with the mainclean sand interval from 9,951 to 10,046 ft. Swelling shales around 10,550 ftprevented wireline logging below this depth and caused some operational delayscementing the casing. Three separate intervals totalling 43 ft were perforatedand the well was flowed at several rates over a 24 hour period. The finalstabilised rate was 30.2 MMcfpd on a 40/64ths choke with a well-head flowingpressure of 3,238 psi. The location of an initial appraisal well on the WestKhilala structure has now been confirmed and will be drilled using the samePD-104 rig. The South Batra No.22 appraisal well was drilled to a depth of 10,200 ft usingthe EDC-09 rig. The Abu Madi Level III target was encountered slightly low toprognosis with approximately 40 ft of gross reservoir section above the watercontact. The existing South Batra No.7 well will adequately drain gas reservesin this section of the reservoir. An extensive section of unconventionalreservoir, with very high background gas levels during drilling, was encounteredthrough the interval 8,200 to 8500 ft. The potential to stimulate this type ofreservoir has been studied with a specialist service company and a testprocedure is being developed. A production string was set in the borehole tofacilitate the proposed rigless well stimulation operation early in 2006. Therig has been moved to drill the South Batra No. 24 development well with the AbuMadi Level II as the target producing horizon. The Turbay No.1 exploration well, targeting the El Tamad oil play, was drilledto a depth of 8,030 ft. using the ECDC-1 rig. A Sidi Salim reservoir sand unitwas encountered on the flank of the target structure from 6,228 to 6,476 ftgross with an oil column from 6,426 to 6,438 ft. As a result, the well wasplugged back to 4,120 ft and side-tracked up-dip. The sidetrack encountered thetop reservoir section at 6,396 ft (30ft above the Turbay No. 1 well) withinitial wireline logs indicating an overall hydrocarbon column of 42ft. Wirelinelogging is continuing in this well in order to fully evaluate the section andthe well is expected to be tested within the next two weeks. Commenting on this, Robert Adair, Chairman, said: "The results of the two exploration wells we have drilled in Bulgaria areencouraging for the prospectivity of our large acreage position there in that wehave clear evidence of an active hydrocarbon system, including oil, and goodreservoir sands. While we have not yet had commercial success, the twoexploration wells just drilled have provided us with some very positive results.Next year we will also look to target the most prospective targets in the deeperwaters of the shelf margin identified on 3-D seismic. Although the drillingcosts will be higher, the technical risk associated with these wells is lowerand reserve potential higher than the shallow shelf wells. In Egypt, the West Khilala discovery presents us with an interesting extensionof the Abu Madi Channel system in the northwest of the Concession and theexcellent test rate confirms the good reservoir quality. A further well locationhas been identified on the structure and potential in deeper horizons will alsobe evaluated. I believe that reserves here could be up to 200 Bcf per structure.Other structures in the area are being fast-tracked for drilling. The SouthBatra No.22 confirmed the extension of the Abu Madi Channel to the south of theexisting No.7 producer but the real interest lies in the unconventional Plioceneinterval which should be tested early next year. If the proposed wellstimulation technique works, we will add a significant new Pliocene play andfurther reserves, some of which are already behind-pipe. The West Khilala field, which is our second largest discovery to date on the ElMansoura Concession, and the confirmation of the Tamad oil trend in the Turbaydiscovery are further indications of the very substantial exploration potentialwhich remains on our Egyptian Concessions." For further information please contact: Melrose Resources plcRobert Adair , Chairman 0184 553 7037David Curry, Chief Executive 0131 221 3360Munro Sutherland, Finance Director 0131 221 3360Chris Thomas, Corporate Development Director 0207 462 1603 Buchanan CommunicationsTim ThompsonBen Willey 0207 466 5000 or visit www.melroseresources.com This information is provided by RNS The company news service from the London Stock Exchange