Emerald Energy provide the following update on operations in Colombia.

Extended production testing of wells drilled on the Capella structure has commenced with an average daily production rate of approximately 400 barrels of oil per day, consisting of contributions from the Capella No.1 and Capella No.2 wells. Since the recent commencement of production, the produced water cut for the field has steadily reduced to a level of approximately 6%.

The field production rate is currently constrained by the oil trucking and sales capacity as would be expected when a new supply of heavy oil, such as the oil produced from Capella, is being introduced to a local market. The Company is actively engaged in developing the market for this oil and expects that the local capacity will be increased during the year. The Company believes that longer term the crude oil will be transported by pipeline to the larger and more established markets for heavy crude where these logistical constraints will not exist.

In the Capella No.3 well, the lower, open-hole, interval in the Mirador sand was flow tested, using a progressive cavity mechanical pump, over a period of 3 days with the production stabilising at a rate of approximately 135 barrels per day of 10 degree API gravity oil with a water cut of approximately 8% which may have been the return of fluids lost to the formation while drilling. The upper, cased-hole, interval was encountered with similar thickness and petrophysical properties as in the previous wells but was not flow tested during the initial drilling and testing operation. The rig is planned to move back to this well to flow test the upper interval at a convenient point during the appraisal programme.

In the Capella No.4 well, both of the Mirador reservoir intervals were encountered with the upper interval in this well being thinner than in previous wells. However, poor cementing within the well bore, resulted in neither of the Mirador intervals being effectively flow tested prior to moving the rig to drill the Capella No.5 well. The Company is currently evaluating ways in which the conditions within the well can be improved to allow effective flow testing of this well during the appraisal programme.

Drilling operations are continuing in the Capella No.5 well. The Mirador sands have been encountered as expected, cores have been cut across the Mirador reservoir intervals, and wireline logging is being conducted.

The Gigante No.2 well that commenced drilling in December 2008 has reached a planned casing point at a depth of approximately 8,725 feet. The 13 3/8” casing is being run into the well and will be cemented in place. The planned total depth of this well is approximately 16,000 feet; drilling and initial evaluation of the well is expected to be completed by mid 2009.

Drilling of the Campo Rico No.5 development well has been completed. Wireline logging in the well indicated a net potential hydrocarbon pay interval of approximately 28 feet in the Mirador sands with the top of the Mirador sand being slightly deeper than encountered in Campo Rico No.3 well, the highest well on the structure. The drilling rig has been demobilised from location, completing the planned drilling activity under this rig contract. The well is now being configured for production, using a smaller workover rig.

The Company has entered into a farmout agreement with La Cortez Energy Inc. (“La Cortez”) under which La Cortez will earn a 20% interest in the Maranta block by paying 60% of the historic exploration costs including the acquisition of 71 km of 2D seismic, plus 65% of the cost of drilling and testing the Mirto No.1 exploration well.

This agreement is subject to a number of conditions, including the approval of the ANH, the National Hydrocarbon Agency of Colombia, of the assignment contemplated by this agreement.

The Maranta block lies in the Putumayo basin in the south-west of Colombia, adjacent to blocks containing producing oil fields and recent discoveries, including the Costayaco discovery. The Mirto No.1 exploration well is planned to commence drilling in the Maranta block towards the end of the first quarter of 2009.

Jacaranda Exploration Well

Preparations are in the advanced stages for the drilling of the Jacinto No.1 exploration well in the Jacaranda block. Civil works for the wellsite and access road have commenced and the drilling rig contract has been awarded. The Company expects the Jacinto No.1 well to commence drilling in the first quarter of 2009.

Emerald’s Chief Executive Officer, Angus MacAskill, said, “We are very pleased with the progress in our asset portfolio in Colombia, with material advances being made in development, appraisal and exploration activities. In particular, we are delighted to have commenced longer term production testing from Capella, a key step in the appraisal of this discovery, less than 5 months after its discovery.”

Tags: Emerald Energy Plc