Beach Petroleum Limited (“Beach”) is pleased to advise the NS377-3 oil development well (North Shadwan Development Lease, Gulf of Suez, Egypt, Beach 20%) has reached its total depth of 2,873 metres MD (1,800 metres TVD RT) after intersecting a gross oil column of 144 metres in the Kareem Formation sandstone of Miocene age. The well is the first production well on the NS377 Oilfield and was drilled as an extended reach deviated well from an onshore location. The onshore surface location will enable rapid completion and connection, with first production expected by second quarter, 2010.

NS377-3 was drilled 150 metres due north of the GH377-1 Kareem Formation discovery well (drilled in 1987 by Amoco). The discovery well encountered a gross oil column of 120 metres, with net pay of approximately 59 metres. The NS377-3 well intersected the Kareem Formation 24 metres updip of the GH377-1 well location, or 18 metres higher than prognosed and based on a preliminary review of wireline log data, a similar or better net to gross ratio is anticipated in NS377-3.

The well is currently being completed with 7” liner tubing and a 2 day production testing program will be undertaken as soon as possible, to provide data about fluid and reservoir properties. During the testing period oil will be flowed into temporary storage tanks.

The well is expected to commence full production in the second quarter of 2010, at an initial rate of approximately 1500 to 2000 barrels of oil a day. Crude oil will be exported seven kilometres to the northwest via a new pipeline to Petrobel’s Ras Ghara processing facility, on the east coast of the Gulf. A second development well on the field is planned in 2010.

Development drilling on the NS385 Oilfield, located offshore and four kilometres south east of the NS377 Oilfield is also planned to commence in 2010. Extended reach drilling technology will again be utilised to penetrate the reservoir from an onshore drilling location and production will be tied into the same export route as the NS377 Oilfield. These two fields are estimated to contain recoverable oil reserves of approximately 11 million barrels (gross).

After completion of operations at NS377-3, the NAFTA Rig #1 will be transported four kilometres southeast to drill the Teen-1 exploration well. This well will also be drilled as a deviated well from onshore to offshore and will test the potential of Kareem Formation sandstones at the Teen prospect.

The North Shadwan Joint Venture has also completed drilling the NS394-3 (Burtocal North) offshore exploration well in the concession. The well was located to evaluate the potential of a fault block adjacent to the NS394-1A Nubia Formation oil discovery made in 2007, but failed to encounter significant hydrocarbons and is to be plugged and abandoned.

The North Shadwan Joint Venture comprises:

– BP Exploration (Delta) Limited 50% (Operator)
– Beach Petroleum (Egypt) Pty Ltd 20%
– TriOcean Energy Company 30%

(Oil Egypt)