Melrose discovers 30Bcfe of natural gas onshore Egypt

Melrose Resources has discovered natural gas at its wholly owned South East Manoura concession onshore Egypt.

The South Damas No.1 exploration well has been successfully drilled to test a prospect in the Sidi Salim formation in the South East Mansoura concession. The well encountered the top reservoir at a depth of 4,345 feet and penetrated 76 feet of net gas pay with good reservoir properties.

The preliminary estimate of the discovered reserves is 30 Bcfe, which is in line with the pre-drill analysis. The discovery well will be completed and tied-back for production to existing facilities and is expected to be on stream within six months at an initial rate of in excess of 12 MMcfepd. The capital cost, including the well completion and flowline, is estimated at US $3.3 million giving an attractive unit development cost of 11 cents per Mcf.

Following the completion of the South Damas No.1 well, the EDC-9 rig will be used to drill another Sidi Salim prospect in the South East Mansoura concession called Tall Rak. This prospect is on trend with a number of other discoveries, including the Tamad field, and has mean unrisked reserves of 190 Bcfe and a chance of success of 34 percent.

In mid January, the Company commenced the acquisition of the first 2-D seismic survey to be shot over the Mesaha exploration concession (Melrose working interest 40 percent) in southern Egypt. The concession has an area of approximately 57,000 square kilometers and is thought to contain a large untested sedimentary basin. The objective of the seismic survey is to confirm the basin architecture and depth and in the event that this yields encouraging results, the Company plans to drill an exploration well on the block in the fourth quarter of 2010



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