NUOG.L Regulatory News (NUOG)

22 Jul 2008 07:00



ENEGI OIL PLC

Trading symbols:

London Stock Exchange: ENEG

Bourse de Luxembourg: GB00B29T9605

22 July 2008

Enegi Oil Plc 

('Enegi' or 'the Company')

Update on Shoal Point 2K-39-Z well and Garden Hill South activities

Highlights:

Shoal Point 2K-39-Z well completed - no commercial hydrocarbons were encountered

Drilling of the well fulfilled licence obligations

Exploration License EL1070 with multiple leads has now been extended to 15 January 2011

Existing Garden Hill South well flowed oil and gas during recent pressure test

Rig being moved to Garden Hill South to drill production/appraisal well in Q3

Enegi Oil, the western Newfoundland focused oil and gas company, announces that the Shoal Point 2K-39-Z well has now been drilled to a measured depth of 3,629 metres. The operator, Shoal Point Energy Limited ('SPE') has informed the Company that the well has intersected the Aguathuna, Catoche and Watts Bight formations.  No hydrocarbons were encountered in any of these formations. Following the Company's strategic decision in 2007 to reduce its exposure to pure exploration plays through farming out, Enegi has a 32% working interest in the Shoal Point 2K-39 well but only paid 17.5% of the costs of the well.

The well has been logged and will be abandoned over the next few days in a way that will allow future re-entry. The logging will enable the partners to fully evaluate the geological structure of the Shoal Point play and the Green Point Shale formation where the presence of hydrocarbons was initially detected. The Company and its partners intend to investigate whether the Green Point Shale could be developed on an economic basis, as recent technological developments have made it possible to commercialise some shale plays such as the Barnett Shale in the US.

Through the drilling of this well, the partners have fulfilled the obligations of Exploration Licence EL1070 and the licence will now be extended until 15 January 2011. There is at least one other identified lead within the license area which lies in a portion of the license area in which Enegi has a 60% working interest. Additionally, previous studies of Shoal Point indicated two substantially different interpretations of the seismic data available. The Company favoured the interpretation not used by the operator for the 2K-39-Z well and, on this basis, intend to complete additional seismic analysis of Shoal Point. It will also complete further research and analysis of the other identified lead within the license. Enegi still believe that Shoal Point is an attractive, high-impact exploration opportunity and are pleased that the license extension provides the additional time necessary to conduct further evaluation and exploration.

Enegi will shortly mobilise the Nabors Rig 45 from Shoal Point to Garden Hill South, a proven discovery, which has produced over 24,000 barrels of oil in the past. The Company intends to drill a horizontal sidetrack well (PAP#1-ST#3). Enegi commissioned two external reports and one internal one on the horizontal sidetrack which forecast that the well should produce between 2,000 and 2,500 barrels/day 

plus associated gas. Drilling at this well is expected to commence in August and take approximately 90 days. 

In preparation for the arrival of the rig, a pressure test was performed on the existing well, PAP#1-ST#2 which was closed in last year as part of the preparations for the new, horizontal sidetrack. During the pressure test, oil and gas were successfully flowed on various occasions and the well-head pressure returned to its normal level of 15,000 kpa. In light of this, the Company will use the rig to clean up the bottom of this sidetrack which is believed to be blocked and then log the open hole. Once this sidetrack has been logged, the Company will commence the horizontal sidetrack. This should not materially impact the timing of the new well.

Alan Minty, Chief Executive Officer of Enegi, said: "Whilst the results from the Aguathuna, Catoche and Watts Bight formations are disappointing, the Green Point Shale has been an encouraging development, but will require significant additional development work. Our strategy of concentrating on less risky, onshore opportunities which are close to production led us to farm out a significant portion of the 2K-39-Z well in 2007. As a result, we only paid 17.5% of the costs of the well while maintaining a 32% working interest. More importantly, we have preserved EL1070 which gives us three additional years to investigate the prospectivity of the other identified lead as well as consider the next steps for Shoal Point.

We will now mobilise the rig to Garden Hill South where the site has been fully prepared. The results of the recent pressure test on PAP#1-ST#2 are very encouraging and a great first development in the larger drilling programme. The PAP#1-ST#3 well has always been our primary focus and we believe that it offers us the greatest opportunity of delivering our strategy for achieving near term production."

Enquiries:

Qualified Persons

The information in this release has been reviewed by Barath Rajgopaul MSc (Mech. Eng.) C. Eng, a director of Enegi. Mr. Rajgopaul has over 25 years experience as a petroleum engineer.

The Company

Enegi Oil Plc is an independent oil and gas group whose objective is the identification, development and operation of hydrocarbon opportunities. The Group's current operations are focused on assets on and around the Port au Port Peninsula in western Newfoundland, which, although lightly explored, is in an active petroleum system with light oil having previously been discovered there. The Group's assets include a proven discovery, Garden Hill South, and four prospects: Shoal Point, Garden Hill Central, Garden Hill North and Lourdes.