ZOL.L Regulatory News (ZOL)

1 Jun 2006 09:20

Crosby Capital Partners Inc01 June 2006 IB DAIWA ISSUES UPDATE ON PROGRESS AT ITS OIL AND GAS EXPLORATION WELL BIG MOUTHBAYOU Crosby shareholders should be aware that IB Daiwa Corporation has today issuedthe following release relating to its drilling programme at Big Mouth Bayou.________________________________________________________________________________ IMPORTANT UPDATE ON DRILLING PROGESS AT BIG MOUTH BAYOU Commercially very attractive find confirmed in recently discovered gas-bearing sands Deeper gas shows encouraging for the first main target below 16,200 feet We are pleased to provide shareholders with the following update on the progressof drilling at Big Mouth Bayou, an exploration well in Louisiana in which oursubsidiary, Lodore Resources Inc., will have a 40% working interest. Casing successfully run to 16,200 feet As anticipated, Pel-Tex Oil Company L.L.C. ("Pel-Tex"), the operator of the BigMouth Bayou well, has confirmed that 7.75 inch casing was successfully run andcemented into place. This is therefore now protecting the gas-bearing sands(referred to as the "CR" sands) that were discovered within the 14,664-16,200feet interval. The base of the casing is at approximately 16,200 feet. Commercially very attractive discovery in CR sands The exact amount of reserves in the CR sands will only be known after furtherwork has been completed, including, but not limited to, a separate developmentwell. However, an in-house analysis of the extensive logs and other data fromthe CR sands has indicated that this discovery has minimum reserves of 10billion cubic feet equivalent ("bcfe"), which is enough in itself to becommercially attractive, and potential reserves that could be in excess of 100bcfe. Subsequent to the successful completion of the casing within the 14,664-16,200feet interval, Pel-Tex have been drilling ahead and as of June 1st the well isat a depth of 17,344 feet. It has been necessary to drill this sectioncautiously in order to manage the very high pressures in the rock formations. Deeper zone very encouraging As anticipated in this highly prospective area, there have been a number ofstrong gas shows in the mud system from the drilling of the deeper sections ofthe well below 16,200 feet, especially from 17,000 feet onwards. We will notknow how much productive gas may be contained in these sands until theformations are evaluated using electrical logging and other techniques. Thisevaluation will occur once Pel-Tex has completed drilling through the currentsection and a further announcement will be made when evaluation results areavailable during the coming few weeks. About Big Mouth Bayou The Big Mouth Bayou prospect is one of a complex of large exploration prospectssituated onshore in Cameron Parish, south-western Louisiana covering an area ofapproximately 4,500 acres. Pre-drill gross unrisked mean reserves of 754 bcfeindicate that Big Mouth Bayou has the potential to be one of the largest onshorediscoveries in the region in recent years. More specifically, the Big Mouth Bayou well is targeting 2 stacked andcompletely independent reservoirs of almost equal potential size; increasing thelikelihood of a significant discovery being made. The Big Mouth Bayou well hasalready delivered some very positive results with a discovery of oil sands atapproximately 7,100 feet, in addition to the commercially attractive gas sands,known as the CR sands, described in this announcement. We have farmed out 35% of the Big Mouth Bayou prospect, in addition to the NorthWest Kaplan and Endeavor prospects, which are all located onshore in SouthernLouisiana, to the Techpacific group in Hong Kong who will pay the drilling costfor these three prospects up to US$ 42.5 million.________________________________________________________________________________ Crosby holds, through two wholly owned subsidiaries of the Company, 24.08% ofthe issued share capital of JASDAQ listed IB Daiwa Corporation. Simon Fry, CEO, commented: "It's now clear that the exploration activity at BigMouth has uncovered a commercially exploitable hydrocarbon system. I amparticularly excited by the strong shows of gas in the deeper section of thewell, as it's within this region that the engineers at Pel Tex and Lodoreidentified the potential for a find that would rank as one of the largeston-shore discoveries in the region in recent years. Whilst there is still a lotof work to be done before we can claim this milestone, the early signs arepositive." He added: "The team at Pel Tex and Lodore have already overcome some complexengineering challenges to deliver this fabulous result, and I look forward toproviding shareholders with further more substantive news in coming weeks. Thisdiscovery, along with the team's earlier find at the Kami well, providesconfirmation of the quality and potential of the exploration portfolio atLodore." # # # For further information please contact: Simon Fry, CEO, tel. +44 207 590 2800Cara Kiewel, Investor & Media Relations, tel. +44 207 590 2808 This information is provided by RNS The company news service from the London Stock Exchange