Serica Energy Regulatory News (SQZ)

27 Nov 2006 14:30

Serica Energy plc27 November 2006 For immediate release: Monday, November 27, 2006 SERICA ENERGY PLC TESTS GAS IN TWO UK NORTH SEA EXPLORATION WELLS London, November 27, 2006 - Serica Energy plc (AIM and TSX Venture: SQZ)announces that it has completed testing gas discovered in the Oak well 54/1b-6and is today preparing to test gas discovered in the Columbus Well 23/16f-11.Serica is Operator of both Blocks. Well 54/1b-6 (Oak) Well 54/1b-6, drilled to evaluate the Oak prospect in the UK Southern Gas Basin,reached its final depth of 8,318 feet subsea on 10th November after 27 daysdrilling. The well encountered a gas-bearing Leman sandstone reservoir with agross gas column of 113 feet. A production test was carried out on an 80 footinterval and a stabilised gas flow rate of approximately 10 million standardcubic feet per day was recorded on a 44/64" choke. However, preliminary on-siteanalysis of the gas indicates that it contains material quantities of carbondioxide and further study will be required before it can be determined whetheror not it will be practical to develop the Oak discovery. The well is currentlybeing plugged prior to the rig leaving the location. Partners in Block 54/1b are Serica and Centrica Resources Limited ("Centrica")each with a 50% interest. Under the terms of the farm-out agreement by whichCentrica acquired its interest in the Block from Serica the costs of drillingthe well have been met largely by Centrica with both companies contributing tothe testing costs. Well 23/16f-11 (Columbus) Well 23/16f-11, drilled on the Columbus prospect in the UK Central North Sea,reached its final depth of 10,116 feet subsea on 21st November after 24 daysdrilling and has encountered an encouraging gross gas column of at least 125feet in the Paleocene Forties sands. Preparations for flow testing the wellhave now commenced with results of these tests expected by mid December. Inthis area of the North Sea it is not anticipated that any significant quantitiesof carbon dioxide will be found in the gas. Serica believes that the Columbus structure encountered by the well extends fromBlock 23/16f into part of the adjacent Block 23/21 ("Part Block 23/21") in whichBG Group plc ("BG") has an equity holding. Under an agreement announced inNovember 2006, Serica will exchange with BG a 25% interest in Block 23/16f for a25% interest in the post-Cretaceous section of Part Block 23/21 (excluding theLomond field). In addition to this exchange of equity interests the agreementalso provides that BG will contribute approximately half of Serica's 50% shareof the costs of drilling and testing the Columbus well, 23/16f-11. Following this agreement, and subject to regulatory and partner approvals, theinterests held in Block 23/16f, in which the Columbus well has been drilled,will be Serica 25% (Operator), BG (25%), Endeavour Energy UK Limited (25%) andEOG Resources United Kingdom Limited (25%). Paul Ellis, Chief Executive of Serica said that "It is very encouraging thatboth of the first two exploration wells drilled by Serica as a North Seaoperator have discovered gas and have borne out the evaluations of our technicalteam. The presence of carbon dioxide in the gas produced during the Oak welltest is disappointing and further evaluation will be required before thecommercial potential of Oak can be established. We are now starting testing operations on the second of the two discoveries, theCentral North Sea Columbus well. We are encouraged by the presence ofgas-bearing sand and are looking forward to a successful test." Background Notes Serica Energy plc is an international oil and gas exploration company withoperations in Indonesia, the UK North Sea, Spain, Ireland and Vietnam. TheCompany's ordinary shares are listed in London on AIM and on the Canadian TSXVenture Exchange under the symbol "SQZ". The 2005 Annual Report and Accounts areavailable at www.serica-energy.com and www.sedar.com. Enquiries: Serica Energy plcPaul Ellis, pellis@serica-energy.com +44 (0)20 7487 7300 Chief Executive OfficerChris Hearne, chearne@serica-energy.com +44 (0)20 7487 7300 Finance Director Pelham Public Relations -UKJames Henderson james.henderson@pelhampr.com +44 (0)20 7743 6673Alisdair Haythornthwaite alisdair.haythornthwaite@pelhampr.com +44 (0)20 7743 6676 CHF Investor Relations - CanadaJan Moir jan@chfir.com +1 416 868 1079 x237Heather Colpitts heather@chfir.com +1 416 868 1079 x223 Forward Looking Statements This disclosure contains certain forward looking statements that involvesubstantial known and unknown risks and uncertainties, some of which are beyondSerica Energy plc's control, including: the impact of general economicconditions where Serica Energy plc operates, industry conditions, changes inlaws and regulations including the adoption of new environmental laws andregulations and changes in how they are interpreted and enforced, increasedcompetition, the lack of availability of qualified personnel or management,fluctuations in foreign exchange or interest rates, stock market volatility andmarket valuations of companies with respect to announced transactions and thefinal valuations thereof, and obtaining required approvals of regulatoryauthorities. Serica Energy plc's actual results, performance or achievementcould differ materially from those expressed in, or implied by, these forwardlooking statements and, accordingly, no assurances can be given that any of theevents anticipated by the forward looking statements will transpire or occur, orif any of them do so, what benefits, including the amount of proceeds, thatSerica Energy plc will derive there from. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. To receive Company news releases via email, please contact heather@chfir.com and specify "Serica press releases" in the subject line. This information is provided by RNS The company news service from the London Stock Exchange