Dana Petroleum announced that the Fin-1X exploration well has discovered a new oil field, in the North Zeit Bay Production Sharing Contract (‘PSC’) area onshore in the Gulf of Suez, in Egypt.

This follows the discovery of the Lorcan oil field, made just last month in the same PSC area.

The Fin-1X well (Dana 100% stakeholder and Operator) was drilled to a depth of 10,038 ft, some 3km from the Lorcan oil discovery announced in June. The Fin-1X well encountered good quality oil bearing sands in the Kareem formation, in line with Dana’s prognosis prior to drilling.

During the drill stem test, the Fin-1X well flowed strongly with high downhole pressures delivering an average flow rate of 1,049 barrels of oil per day through a 52/64′ choke. The flow rate during this test was restricted by the temporary flow testing facilities and the requirements to truck the produced oil from the desert location. The well has been retained as a future oil producer.

The Fin discovery together with Lorcan, which flowed at 4,714 barrels of oil per day and was also constrained by the testing equipment, confirms this area will be very attractive to develop. A preliminary development plan has already been submitted to the Egyptian General Petroleum Corporation (EGPC) for agreement. Dana estimates that these two discoveries so far in this PSC area have proven up initial reserves of 10-12 million barrels of oil (100% Dana) with the potential for considerable upside beyond these initial proved volumes. Further drilling is planned.

Once the development plan has been agreed with EGPC, an application will be submitted to the Ministry for a development lease.

Following the development lease being lodged, the potential for early oil production will be discussed with EGPC. With EGPC’s agreement, early production facilities which would allow oil to be exported by road tanker could be installed and operating within one month. The full development plan is to tie production from this PSC area back to the East Zeit oil and gas processing plant, which is situated just 15km to the south east of the Lorcan and Fin oil fields. Dana also holds a 100% working interest in East Zeit, making these developments extremely efficient and commercially attractive.

The drilling rig will now move to another operator to drill one well, which was a pre-existing contractual commitment for the rig, before returning to Dana’s North Zeit Bay concession. Dana expects the rig to return in October, when it will drill at least one appraisal well on the Lorcan field plus a further exploration well in this important PSC area. Drilling on the North Zeit Bay concession will also continue in 2011.