Melrose Resources plc, the oil and gas exploration, development and production company, today provides an update on its Egyptian operations.

Production
Melrose’s net entitlement production from the El Mansoura and South East El Mansoura concessions during the first quarter 2008 averaged 14,890 boepd, comprising 69% gas and 31% hydrocarbon liquids. The average production rate reflects strong contributions from the West Khilala and West Dikirnis fields, which are currently producing at gross rates of 103 MMcfpd of gas and 10,000 bpd of oil, respectively.

The increasing Egyptian output has allowed the Company to achieve a new net peak production rate at a group level of 22,400 boepd during the quarter. This compares favourably with the 2008 production guidance of 20,000 boepd which remains unchanged.

Developments
Government approval has been received for the development of the South Zarqa and North East Abu Zahra fields which were discovered in late 2007. These fields contain combined gross reserves of approximately 59 Bcf of gas and 1.2 MMbbls of liquids which will be produced via a common 35 kilometre, 10 inch flow line tied back to the existing South Batra facilities. First production is expected early in the second quarter 2009.

Exploration
East Abu Khadra No.1
Operations have been completed on the East Abu Khadra No.1 exploration well which was drilled using the EDC-9 rig to test an Abu Madi prospect in the northern area of the El Mansoura concession. As previously announced, the well encountered 38 feet of net pay and has estimated gross reserves of 17 Bcfe. During flow testing the well produced 13.0 MMcfpd of gas with 182 bpd of associated condensate and plans are now being prepared to tie back the well to the South Batra facilities for production in late 2008.

The EDC-9 rig has now moved location and commenced operations in the Qantara field, where it is being used to sidetrack the shut-in Qantara No.4 production well. It will then be used to drill the North Dikirnis No.1 exploration well on a Qawasim prospect which is located to the north of the West Dikirnis field and has unrisked reserves potential of 36 Bcfe with an estimated chance of success of 30%.

Damas No.1
The Damas No.1 exploration well has been drilled on a Sidi Salim prospect in the northern area of the South East El Mansoura concession using the ECDC-1 rig. The well encountered the top reservoir at 5,115 feet and found three hydrocarbon-bearing intervals with a combined gross gas column of approximately 124 feet. Open hole logs indicate a net pay interval of 61 feet with an average porosity and water saturation of 25% and 28%, respectively. The well was flow tested at a rate of 14.3 MMcfpd of gas with 105 bpd of condensate and the discovery reserves are estimated to lie in the range 8 Bcfe to 10 Bcfe.

The rig will shortly be moved to drill the East Sindy No.1 exploration well on a combined Sidi Salim and Oligocene prospect with unrisked reserves potential of 65 Bcfe and an estimated chance of success of 30%.

South Aga No.1
The South Aga No.1 exploration well has been drilled with the EDC-53 rig on an Abu Madi channel sand prospect in the south of the El Mansoura concession. The well reached a total depth of 8,710 feet and open hole logs indicated a net sand interval of 511 feet in the Abu Madi formation but with no commercial hydrocarbon shows. The well will be plugged and abandoned.

Ar Rub No.1
The Ar Rub No.1 exploration well is being drilled with the EDC-54 rig in the South East El Mansoura concession. The well has reached a depth of 8,190 feet and is currently drilling ahead approximately 1,950 feet above the target Sidi Salim sand interval. The prospect has unrisked reserves potential of 90 Bcfe with a chance of success of 25%.

Seismic Acquisition
Melrose’s 2008 Egyptian seismic acquisition programme commenced on the 9 March 2008 and to date 430 kilometres of 2-D data has been acquired, with 3-D acquisition scheduled to commence shortly.

The seismic data is being acquired over the South East El Mansoura concession which contains an extension of the geologic trends identified on the El Mansoura concession, in particular in the Sidi Salim formation. In addition, the concession contains other geological trends which appear to be more analogous to the Egyptian Western Desert. The primary purpose of the seismic acquisition is to provide data for a detailed block evaluation and to identify Cretaceous and Jurassic prospects for drilling in 2009.

Commenting on the above, David Thomas, Chief Executive, said:
“We are very pleased with the production performance of our Egyptian fields during the first quarter of the year and the speed with which we received Government approval for the new South Zarqa and North East Abu Zahra developments. We are also encouraged by the well test results on East Abu Khadra and the Damas discovery, which suggest that they are both candidates for early production tie-back.”

(Oil Voice)