Drilling and completions program on track: The Company remains on track to drill 11 to 12 exploration wells in Area 47 in 2008 utilizing two drilling rigs under long term contracts, which would increase the number of wells drilled by Verenex to 19 to 20 by year end 2008.
Since the Company's first quarter results were released in early May 2008, three wells were drilled and cased, including the Company's second and third new field wildcat exploration wells B1 and C1-47/04 in Block 4 in the northern part of Area 47 and a third appraisal well A4-47/02 on the A1-47/02 oil discovery in Block 2 in the south. This increases the total number of drilled and cased wells to 13. A 14th well G1-47/02 is currently drilling.
Flow testing of the A1-47/04 well, the Company's first NFW exploration well in Block 4, was recently successfully completed and detailed results will be released following review and approval by the Libya National Oil Corporation (NOC). This is a significant result and confirms the potential of a new Lower Acacus play fairway in the northern part of Area 47 and provides the first positive results in the deeper Memouniat Formation. Flow testing is currently underway on the A4-47/02 appraisal well.
As announced previously, seven exploration and appraisal wells have tested at a maximum aggregate rate of approximately 83,000 bopd and have been suspended as potential future oil production wells. The testing results from the A1-47/04 and A4-47/02 wells will increase this aggregate rate.
A1-47/04 NFW Exploration Well Successfully Flow Tested
The A1-47/04 NFW exploration well (well No. 10) was drilled and cased to a depth of 10,400 feet in the Memouniat Formation. The Company recently completed extended flow tests on the well from a total of 85 feet of perforations in two intervals, including one interval in the Memouniat Formation and one interval in the Lower Acacus Formation. The Company expects to release these results shortly, concurrent with NOC confirmation of well status.
A4-47/02 Appraisal Well Currently Testing
The A4-47/02 appraisal well (well No. 11), the third appraisal well on the A1-47/02 oil discovery in Block 2 in the southern part of Area 47, was drilled and cased to a depth of 10,380 feet. The well is located on a Lower Acacus structure approximately 3.5 kilometres northwest of the A1-47/02 oil discovery and 3.0 kilometres northeast of the A2 appraisal well.
Logs and other formation evaluation results indicate that the A4 well intersected a water oil contact in Basal Sand 1 in the Lower Acacus Formation at the same subsea depth as the contact encountered in the A2 and A3 appraisal wells. This sand was oil filled in the A1 discovery well. Oil properties and pressure gradients are also aligned in all four wells.
The results from the A4 well provide further confirmation of an oil column height of at least 155 feet in Basal Sand 1 in a large structural and stratigraphic trap that encompasses the A1, A2, A3 and A4 wells.
Flow testing of Basal Sand 1 in the Lower Acacus Formation is underway and testing of the shallower Aouinet Ouenine Formation is expected to follow.
B1-47/04 NFW Exploration Well Drilled and Cased
The B1-47/04 NFW exploration well (well No. 12) was drilled and cased to a depth of 10,250 feet in the Memouniat Formation. B1 is the second well drilled by Verenex in Block 4 in the northern part of Area 47 on a structure defined by 3D seismic shot in 2007. The B1 well is located approximately 10 kilometres north of the Company's A1-47/04 indicated oil discovery and 1.0 kilometres northeast of the A1-61 well, which was drilled and abandoned in 1960 after encountering hydrocarbon shows in the Lower Acacus Formation.
The B1 well was cased based on hydrocarbon shows while drilling and open-hole formation evaluation results, which indicated the presence of hydrocarbons in the Lower Acacus and the Memouniat Formations. However, confirmation of well status and capability await testing results expected later in the third quarter of 2008.
C1-47/04 NFW Exploration Well Drilled and Cased
The C1-47/04 NFW exploration well (well No. 13), the Company's third well in Block 4, was drilled and cased to a final depth of 10,155 feet in the Memouniat Formation. The C1 well is located on a structure defined by 3D seismic shot in 2007 approximately 8.5 kilometres west of the B1-47/04 well. The C1 well was cased based on hydrocarbon shows while drilling and open-hole formation results, which indicated the presence of hydrocarbons in the Lower Acacus and the Memouniat Formations. However, confirmation of well status and capability await testing results expected in the fourth quarter of 2008.
The drilling and formation evaluation program for the C1 well was accomplished with Ensign Rig 28 in 36 days establishing a new pacesetter time for spud to rig release.
G1-47/02 NFW Exploration Well Drilling
The G1-47/02 NFW exploration well (well No. 14) is currently drilling with KCA DEUTAG Rig T-19 to the Memouniat Formation after encountering encouraging hydrocarbon shows in the Lower Acacus Formation. Target depth is approximately 10,500 feet. The G1 well is the Company's second well in the eastern part of Block 2 and is targeting a structure defined by 3D seismic shot in 2007 approximately 6.5 kilometres northeast from the D1-47/02 oil discovery.