Circle Oil says that the Al-Amir SE-5 appraisal well has been successfully connected and has commenced production in the Al-Amir Development Lease in the onshore North West Gemsa Concession in Egypt.

The Al-Amir SE-5 well is producing at a rate of approximately 1500 Bopd through a 24/64" choke. The well is producing from the upper Kareem Shagar Sandstone pay zone which is 19 feet thick. The lower pay zone in the Kareem Rahmi Sandstone is 17.5 feet thick giving total pay zone thickness in Al-Amir SE-5 of 36.5 feet.

Overall adjusted daily production levels from the Al-Amir and the Geyad Development Leases have been choked back to minimize flaring, install new early facilities and maintain reservoir integrity. New stabilized production rates will be announced in due course. Cumulative oil production from the area since production began in late February 2009 is now over 1.7 MMbbls.

The partners have approved in principle the 2010 budget and work programme which in the Al-Amir SE field includes drilling two additional wells the Al-Amir SE-7 appraisal well and one water injection well. In the Geyad field the Geyad-3 development well is scheduled to be drilled during the third quarter. Existing field facilities will be augmented with additional storage capacity, flow line, pipe lines and manifolds. Geological and engineering studies will be carried out in preparation for water flooding to commence early in 2011. Exploration activities include reprocessing of existing seismic and the potential drilling of an exploratory well. Total expenditures for 2010 are estimated at $46 million with Circle's share being $18.4 million.

As a result of the additional development drilling and facilities expansion, total gross production from the concession is expected to exceed 10,000 Bopd by year-end.

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).

The rig is now drilling the Al-Amir SE-6 well, which was spudded on 14 March 2010 and is the fifth appraisal well in the Al-Amir SE discovery area, designed to reach a total depth of 14,000 feet. The primary target is again the Kareem Formation and the secondary objective is to assess the hydrocarbon potential of the Pre-Miocene Nubia sandstones. This well is presently at a depth of approximately 3,000 feet.

David Hough, CEO of Circle, said, "We are delighted with the successful hook up of the Al-Amir SE-5 well. The partners are now agreed on the 2010 budget and the way forward for the future which will see both a stable and increasing revenue stream for all partners".

Tags: Circle Oil plc