Circle Oil provides the following operational update on its activities in Egypt.

The exploration/appraisal well Al Ola-1X is presently drilling ahead after setting casing at 10,600ft MD in the Upper Rudeis, following drilling through the Kareem Formation. Log analysis has shown both sand units of the Kareem Formation to be oil bearing with no indication of the OWC. Formation pressure testing shows some limited communication with the updip Al Amir SE producers, and the well proves up the southern field extension in the Al Ola area. The Top Kareem Shagar was encountered at 9,731ft MD with 6ft of net pay and the Top Kareem Rahmi at 9,782ft MD with 19 ft of net pay (operator figures). The oil column is presently down to the base Rahmi Sand at 9,802ft MD (9,719ft SS).

The secondary objective in the Lower Rudeis Formation,has also been reached where oil and gas were tested in the Al Amir SE-6X well. Strong gas shows were encountered in the interval 13,400-13,520 feet. The Al Ola-1X well is planned to be drilled to a total depth of 13,700 feet.

A further announcement on the well results, including testing, will be made in due course.

Separately, the partnership has also agreed the required plans to bring the gas associated with the NW Gemsa Concession producing wells into production, which is presently planned to be completed within the next 6 months.

Current gross production from the Al Amir, Al Amir SE and Geyad fields in the NW Gemsa Concession is 9,000 to 9,500 bopd.

The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 264 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 with a 20 year term, plus extensions, in the event of commercial discoveries. The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

Prof. Chris Green, CEO, said, 'Circle is maintaining its planned operational momentum and the work programmes are proceeding in line with our expectations. We are delighted with Al Ola-1X proving up the Kareem sands yet again and proving up the field extension in the south. The secondary target has also given strong shows of gas . Once this well is finished, we will consider the need for some injector support drilling before undertaking more appraisal and development wells.'

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