Circle Oil has announced its first oil production in Egypt. Having obtained the necessary agreements from the Egyptian General Petroleum Corporation (EGPC) and completed the required production engineering facilities, initial production commenced in the Al Amir Development Lease area in the NW Gemsa Permit in the last few days.

Production commenced at approximately 1450 BOPD and is expected to reach a daily average rate of approximately 3000 BOPD in the short term. This oil output is being produced from the discovery well Al Amir SE-1X and the first appraisal well Al-Amir SE-2X. Updates on production figures will be announced in due course once production has stabilised. The initial oil produced was transported by truck to the Gazwarina facilities but it is now being piped to the facility following connection of the two wells and laying of a 7 kilometer tie-in pipeline.

Further plans, in the process of finalisation, include bringing into production the Al-Amir 1 well where the Company recently announced the discovery of an additional oil bearing zone. The partners also intend to increase the daily production capability from both of the Al-Amir SE wells.

Exploration Well Shehab-1

Upon completion of the Al Amir SE-2X appraisal well, the drill rig Muburrak-1 was moved to drill a further exploration well in the N W Gemsa Permit named Shehab-1. This relatively shallow exploration well ( T.D. 6452 feet) was designed to drill targets in a part fault and part dip defined prospect containing the Belayim and Kareem Formations. This well has now been drilled and open hole logged. Log interpretation indicated that the Kareem Formation is likely to be water bearing at the target levels, but the interpretation also indicated the possibility of significant hydrocarbon bearing sandstones in the middle Belayim with 22 feet of net pay. The decision was taken not to test these sandstones in this location, but to drill them in a future well in an updip position. The exact timing for this updip drilling has yet to be decided.

The drilling rig is now moving to drill a second exploration well named Geyad-1 in the permit. This well is structurally and geologically similar prospect to the Shehab well with the same targets in the Belayim and Kareem sandstones. Following completion of this second exploration well, the rig is currently scheduled to move back to the Al Amir Development Lease area to drill a second appraisal well there, Al-Amir SE-3X.

The NW Gemsa permit covers an area of over 400 square kilometers and lies about 300 kilometers southeast of Cairo, in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production license of 20 years, plus extensions, in the event of commercial discoveries. The Al Amir Development Lease is a designated production lease covering an area of 36 square kilometers within the boundaries of the NW Gemsa permit. The North West Gemsa permit partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil plc (40% interest); and Premier Oil plc (10% interest).

Commenting on the announcement David Hough, CEO Circle Oil, said, “Today’s announcement is a very significant step forward for Circle as we now have become both an oil and a gas producer. The Circle share of this initial production marks the start of significant earnings and cash flow for the Company. It further reinforces and confirms the company’s decision to balance its exploration strategy to seek out and deliver on lower risk prospects with good short term earnings potential. It is our intention to increase production from the Al Amir Development Lease both through the existing wells and by drilling successful additional appraisal wells.

“We are also very pleased to have logged potentially significant hydrocarbons in our latest exploration well, Shehab-1, in Egypt. We look forward to drilling this prospect at an updip location in the future.”