Melrose Resources has provided an operational update for its assets in Egypt, the Unites States and Bulgaria.

Egypt
The EDC-9 drilling rig is currently completing the West Dikirnis No.7 well as the first horizontal oil producer to be drilled in the West Dikirnis field. The well has reached a total depth of 11,587 feet and a horizontal wellbore 890 feet long has been drilled within the reservoir section. Some operational delays have been experienced drilling the well but completion operations are now ongoing with a view to bringing the well on production next month.

The West Zahayra No.2 well has been drilled using the EDC-54 rig to appraise the West Zahayra No.1 Qawasim discovery and to test a deeper Sidi Salim exploration target. The well reached a total depth of 10,532 feet and although hydrocarbon shows were evident, they were considered to be non commercial and the well has been plugged and abandoned.

The EDC-54 rig will now move to drill the East Dikirnis (also known as North Tariff) exploration prospect in the El Mansoura concession which has unrisked reserves potential of 49 Bcfe with an estimated chance of success of 48%. The rig will then be used to drill a horizontal production well on the Tamad oil field where the Company sees the potential to add in excess of 1.0 MMbbls of oil reserves through further field development investment.

The EDC-9 rig will next be used to drill the North Dikirnis prospect which lies in between the West Dikirnis and the South Zarqa fields and has unrisked reserves of 33 Bcfe and a chance of success of 32%. It will then drill a second horizontal well in the West Dikirnis field.

United States
In East Texas, the Company is preparing to spud the Ramsey No.1 well in mid-November 2008 to test a Reklaw deep gas prospect with unrisked reserves potential of 26 Bcf and a chance of success of 50%. Subsequently, the rig will drill the Nunan No.1 well which has multiple pay targets with a total unrisked reserves of 117 Bcfe and an averaged chance of success of 25%.

Production Outlook
In Egypt, the Company has completed the Qantara field facilities redevelopment and the Qantara No.4 sidetrack well was brought on stream on October 12. The well is currently flowing at a condensate rate of 510 Bpd and 3.5 MMcfpd of gas. The East Abu Khadra field development has slipped by approximately six weeks due to delays experienced accessing the preferred pipeline route and the field is now expected to be on stream in early-December. The operational delays experienced drilling the West Dikirnis No.7 horizontal well have also resulted in a slight reduction to the West Dikirnis production forecast for this year.

In Bulgaria, Melrose continues to pursue the Galata field gas storage project and in early November will submit the commercial development plan to the Bulgarian authorities for approval. Pending receipt of the approval, the Company has reduced the Galata production rate to around 11 MMcfpd to ensure sufficient gas is left in the reservoir to implement the project and expects to cease production from the field at the end of this year.

Based on the above, the Company believes it is prudent to reduce its 2008 net entitlement production guidance from 19,200 boepd to 18,300 boepd.

(Melrose Resources Press Release)