Exploration and Field Developments Update

7 May 2009 07:00



FOR IMMEDIATE RELEASE

7 May 2009

Melrose Resources plc

("Melrose" or "the Company")

Exploration and Field Developments Update

Melrose Resources plc (LSE: MRS), the oil and gas exploration, development and production company, is pleased to announce a successful exploration discovery and first production from two new field developments in Egypt. The Company also provides an update on its exploration drilling program in East Texas.

Egypt

The South Khilala No.1 exploration well has been successfully drilled with the EDC-9 rig to test a prospect located approximately 10 kilometres to the south of the West Khilala field in the El Mansoura concession. The well encountered 62 feet of net pay in the Qawasim formation and has been flow tested at 17.6 MMcfpd of gas with small amounts of condensate. The mid-case estimate of the discovery reserves is 36 Bcf (on a working interest basis) and the well has already been completed as a producer for fast-track development via the West Khilala field facilities. 

The EDC-9 rig is currently being moved to the West Dikirnis field where it will be used to drill a third horizontal development well following the recent success of the West Dikirnis No.7 and No.10 horizontal wells. On a combined basis, these two wells were drilled through over 3,100 horizontal feet of reservoir interval and are currently producing 5,200 bpd of oil.

The South Zarqa and North East Abu Zahra field developments in the El Mansoura concession have been completed within budget and ahead of schedule.  The fields have been tied back to the South Batra production facilities using a common 35 kilometre flow line and came on production on 20 April 2009. The fields contain total proved plus probable reserves of 58 Bcf of gas and 1.6 MMbbls of condensate and are currently producing at 22 MMcfpd of gas and 710 bpd of condensate. The production rate from the fields will increase to approximately 40 MMcfpd over the next four months when additional facilities capacity will become available at the South Batra plant. The North Dikirnis No.1 appraisal well was also brought on stream on 13 April 2009 through the West Dikirnis facilities and is producing approximately 5 MMcfpd of gas and 150 bpd of condensate. 

Production from the new developments, coupled with a strong contribution from the existing fields, has increased Melrose's Egyptian production at the end of May to 224 MMcfpd of gas equivalent (on a working interest basis). This comprised some 160 MMcfpd of gas and 10,700 bpd of oil and condensate.

United States 

The East Texas Nunan No.1 exploration well spudded on 15 January 2009 and reached a total depth of 12,005 feet. The well encountered gas shows in the Reklaw formation, which was penetrated at a depth of 11,602 feet, and open logs indicated a net pay interval of approximately 64 feet. Flow test data acquired from the well demonstrate that the formation has relatively low permeability and Melrose is currently preparing to conduct a fracture stimulation treatment and further testing to ascertain whether commercial production rates can be established from the reservoir. 

Commenting on the update, David Thomas, Chief Executive said:

"We are delighted to have brought our new developments in Egypt on stream ahead of schedule and to have achieved a new production record for Melrose in the country. It is also very pleasing to have recorded our second exploration success of the year and we will be fast-tracking South Khilala for development."

For further information please contact

or visit www.melroseresources.com

Glossary:

Bcf - billion cubic feet of gas

bpd - barrels of oil or condensate per day

MMbbls - million barrels of oil or condensate 

MMcfpd - million cubic feet of gas per day