Operating Update Egypt (6846E)

TIDMCOP

RNS Number : 6846E

Circle Oil PLC

11 April 2011

11 April 2011

CIRCLE OIL PLC

("Circle" or the "Company")

Operating Update Egypt

Circle Oil Plc (AIM: COP), the international oil and gas exploration, development and production company, is pleased to announce an update regarding the Al Amir SE-7X water injector well located to the west of the Al Amir SE-4X well in the Al Amir Development Lease. Al Amir SE-7X, which started drilling on 27 November 2010, has been successfully sidetracked and has now reached target depth ("TD") at 15,600 ft measured depth ("MD") in the Lower Rudeis.

The main objectives for this well were to provide water injection support into the Kareem sands and to delineate the Kareem oil-water contact, which is required for technical reasons including resource estimation. The Kareem sands were encountered between 10,664 and 10,852 ft MD and these have been successfully cased off. The Main Shagar Sands, encountered between 10,738 and 10,770 ft MD, were water bearing and of excellent reservoir quality. As a result Al Amir SE-7X should provide a good initial water injection well. The overlying sand stringers from 10,664 to 10,718 ft MD have indicated oil saturations on logs. This places the deepest oil in Al Amir SE for the Kareem at approximately 10,200 ft Sub Surface, which positively corresponds with the latest estimates for the oil-water contact calculated using formation pressure data. Additional work is to be undertaken to refine this elevation. The well has been plugged back to 11,180 ft MD and is being completed as a water injector in the Kareem sands to support the updip oil producers. A further development well and water injection wells form the immediate drilling programme for the Al Amir SE field.

The secondary objective of the well was to evaluate the Lower Rudeis thin sand stringers with indicated hydrocarbon saturations between 15,553 and 15,567 ft MD, which were previously encountered in the Al Amir SE-6X well. Log analysis by the operator identified 6 ft of pay with an average 10% porosity and a hydrocarbon saturation of 68%. The decision was taken not to test this interval due to mechanical problems, but to conduct further drilling to properly evaluate the productivity of the Lower Rudeis sands.

In the drilling of the up-hole section of Al Amir SE-7X, sand stringers with potential hydrocarbon saturations containing 6 ft of potential pay were encountered in the South Gharib (5,634 to 5,645 ft MD) and a further 4 ft of potential pay in the Belayim (8,400 to 8,404 ft MD). These zones will be the subject of further evaluation in future drilling which will be undertaken to properly evaluate these positive occurrences for additional hydrocarbons in the NW Gemsa block.

During 2010 four successful wells were drilled and completed:

-- Geyad-2X ST completed as a producer in February;

-- Al Amir SE-5X completed as a producer in March;

-- Al Amir SE-6X completed as a producer in July; and

-- Al Ola-1X completed as a producer in December.

Further intensive exploration, appraisal and development drilling is planned over the next eighteen months. This will include drilling water injection wells to support the oil production in both the Al Amir SE and Geyad fields as required.

In addition, construction is now underway to construct facilities together with an 8-inch gas pipeline to the nearby facilities for gas export and the sale of gas and associated liquids. These facilities are expected to be completed by year end, with an associated increase in gas and liquids production.

The current production rate from the NW Gemsa fields of Geyad and Al Amir SE is approximately 7,500 bopd gross as fluid off-take from the fields is controlled in line with best reservoir management practice as the water flood is initiated, becomes operational and is proven to be effective in maximising recovery rates. By mid 2012 the production rate is expected to rise to approximately 12,000 bopd gross as water flood operations become effective.

Gross production from start up in February 2009 through to the end of February 2011 was 4.6 MMBO. Work is currently underway on an independent third party report on ultimate recoverable resources for NW Gemsa. The results are expected during the second quarter of 2011 and will be incorporated within the Annual Report for 2010. The NW Gemsa permit, in which Circle Oil holds a 40% interest, has been a very successful venture for the Company.

The NW Gemsa concession, containing the Al-Amir and Geyad Development Leases, covering an area of over 260 square kilometres, lies about 300 kilometres 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 licence of 20 years, plus extensions, in the event of commercial discoveries. The North West Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

Glossary

 
 ft     feet 
 bopd   barrels of oil per 
         day 
 MMBO   Millions of barrels 
         of oil 
 

In accordance with the guidelines of the AIM Market of the London Stock Exchange, Professor Chris Green, Chief Executive Officer of Circle Oil plc, an explorationist and geophysicist with over thirty years oil & gas industry experience, and Dr Stuart Harker, VP Geology, also with over 30 years experience are the qualified persons as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies, who has reviewed and approved the technical information contained in this announcement. Professor Green and Dr Harker have relied on primary information supplied by the operator in carrying out their review.

For further information contact:

Circle Oil Plc ([phone])

Professor Chris Green, CEO

Evolution Securities ([phone])

Chris Sim

Neil Elliot

Fox-Davies Capital ([phone])

Daniel Fox-Davies

Philip Davies

David Porter

Citigate Dewe Rogerson ([phone])

Martin Jackson

Murray Consultants ([phone])

Joe Murray

Joe Heron

Notes to Editors

Circle Oil Plc

Circle Oil Plc (AIM: COP) is an international oil & gas exploration, development and production Company with an expanding portfolio of assets in Morocco, Tunisia, Oman and Egypt with a combination of low-risk near-term production and significant exploration upside potential. The Company listed on AIM in October 2004.

Internationally, the Company has continued to expand its portfolio over the past 2 years and now has assets in the Rharb Basin, Morocco; the Ras Marmour Permit in southern Tunisia; the Mahdia Permit offshore Tunisia; the Grombalia Permit in northern Tunisia and the Zeit Bay area of Egypt. Circle also has the largest licence holding of any Company in Oman. In addition to its highly prospective Block 52 offshore, the Company also has an ongoing exploration program in Block 49 onshore.

The Company's strategy is to locate and secure additional licenses in prospective hydrocarbon provinces and through targeted investment programmes, monetise the value in those assets for the benefit of shareholders. This could be achieved through farm-outs to selected partners who would then invest in and continue the development of the asset into production, or Circle may itself opt to use its own expertise to appraise reserves and bring assets into production, generating sustained cash flow for further investment.

Further information on Circle is available on its website at www.circleoil.net.

This information is provided by RNS

The company news service from the London Stock Exchange

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