Management Resource Solutions Regulatory News (MRS)

16 Feb 2007 15:04

Melrose Resources PLC16 February 2007 For Immediate Release 16 February 2007 MELROSE RESOURCES PLC Trading update and 2006 production Melrose Resources plc (LSE: MRS), the oil and gas exploration, development andproduction company with interests in Egypt, Bulgaria, the USA and France, todaygives the following trading update and reports 2006 production. Development projects First production on the West Khilala development project was achieved on Monday5th February. Production commenced at an initial rate of 34.1 MMcfpd but hasincreased steadily to a current level of 63.2 MMcfpd. Well performance is inline with expectations and is on track to achieve the target rate of 80.0 MMcfpdby the end of February. Further production equipment will be installed at thefield over the next two months and a continuing appraisal and developmentdrilling programme of up to a further 4 wells is planned. The West Dikirnis development project is now approximately one third completeand is still on schedule to achieve first production before the end of the thirdquarter of 2007. Recent drilling activity On the El Mansoura Concession in Egypt, the West Khilala No.3 development wellwas drilled as a production well on the northern flank of the West Khilalastructure in the Qawasim formation. The well reached TD at 10,500 ft with thetarget reservoir encountered on prognosis with 82.5 ft of clean gas-bearingreservoir. The gas/water contact is in line with the three previous wellsdrilled on the West Khilala field and the reservoir quality, which is similar tothe earlier wells drilled, is very good. The well is currently being completedand will be immediately placed on production. It will then be tested into theproduction facilities. The rig will then move to drill the West Khilala No.6appraisal well, located down-dip of the structural crest. This well has beenplanned with the objective of increasing the calculated proved reserve volumesin the field. Also on the El Mansoura Concession, the West Dikirnis No.7 appraisal well wasdrilled as a step-out well with the intention of proving additional oil reserveson the northern flank of the West Dikirnis structure. The well reached TD at9,700 ft and encountered a gross vertical oil column of around 70 ft with up to40 ft of net pay in high quality sand reservoir. The well is being completed andwill be tested during the next week. The drilling rig will then move to the WestDikirnis No.3 development well location. 2006 production Melrose's net production in 2006 totalled 25.4 Bcf of gas and 405.2 Mbbls of oiland condensate. Production from the Galata gas field in Bulgaria totalled 17.9Bcf, an average production rate of 49.2 MMcfpd. The average realised gas pricewas $3.37 per Mcf. In Egypt, gross production from Melrose's properties totalled16.8 Bcf and 362.9 Mbbls of oil and condensate. Average gross production rateswere 46.0 MMcfpd and 994 bpd. Melrose's net production, which includesproduction of Merlon after the acquisition on 29th June, totalled 5.8 Bcf of gasand 137.4 Mbbls of oil and condensate, an average of 15.9 MMcfpd and 376 bpd.Average realised prices were $2.63 per Mcf and $58.10 per bbl. Melrose'sproduction in the USA, which also includes production of Merlon from theacquisition date, totalled 1.7 Bcf of gas and 267.8 Mbbls of oil and condensate,an average of 4.7 MMcfpd and 734 bpd. Average realised prices in the USA were$6.30 per Mcf and $58.29 per bbl. Current production Current production in Bulgaria is approximately 33.0 MMcfpd, which reflects theproduction target for 2007 of 10.5 Bcf. Gross production in Egypt is currentlyapproximately 92.8 MMcf of gas and 2,023 bbls of oil and condensate per day. Netentitlement production is approximately 41.7 MMcf and 910 bbls per day. In theUS, current production is approximately 3.9 MMcf and 1,153 bbls per day. Commenting on the recent drilling and production news, Robert Adair, ExecutiveChairman, said: "First production at West Khilala has been achieved ahead of schedule and inline with budget which is a great credit to the development team in Cairo. TheWest Dikirnis development project is now well underway with the majorprocurement orders placed. Our drilling focus in Egypt for the next few monthswill be on the continuing appraisal and development of the West Khilala, WestDikirnis and Salaka fields. We anticipate a very interesting explorationprogramme in Egypt in the second half of the year. In Bulgaria we are finalisingarrangements for our exploration drilling programme in the second quarter. Inthe US our explorationists are concluding a review of the US assets acquiredwith Merlon: our initial view is that there are several attractive drillingopportunities here also. 2007 promises to be an important year in Melrose'sdevelopment." For further information please contact: Melrose Resources plc Robert Adair, Executive Chairman 0131 221 3360 Munro Sutherland, Finance Director Buchanan Communications Tim Thompson 0207 466 5000 Ben Willey or visit www.melroseresources.com Glossary: Bcf - billion cubic feet of gas bbl- barrel of oil or condensate bpd - barrels of oil or condensate per day Mbbls - thousand barrels of oil or condensate Mcf - thousand cubic feet of gas Mcfpd - thousand cubic feet of gas per day Melrose - Melrose Resources plc Merlon - Merlon Petroleum Company MMcfpd - million cubic feet of gas per day This information is provided by RNS The company news service from the London Stock Exchange