Emerald Energy advises that drilling operations have commenced on the Khurbet East No.8 delineation well in the Khurbet East Field. The well is designed to provide geologic information on the southern limits of the Khurbet East Field, establish the oil-water contact and to have the potential to be used as a water disposal well in the future. The Khurbet East No.8 well is expected to take approximately 45 days to drill and evaluate.

Based on a preliminary evaluation of the data acquired in the Yousefieh No.1 discovery well and the Yousefieh No.2 appraisal well, Gulfsands estimates the range of oil initially in place, on a gross basis at stock tank conditions, to be 27.2 (P90), 48.5 (P50) and 73.9 (P10) million barrels. Further work is required to determine the expected range of recovery factors and, hence, recoverable reserves.

The Operator plans to submit a commerciality application for the Yousefieh discovery and, in the third quarter of 2009, to drill a second appraisal well.

Gross oil production from the Khurbet East field averaged 8,470 barrels per day during the 163 day period between commencement of production and the end of 2008 (unaudited). The average sale price during this period was US$ 61 per barrel (unaudited).

During 2009, Gulfsands expects gross oil production to average between 12,500 and 13,000 barrels per day with a rate at the end of the year of approximately 16,000 barrels per day. Gross development capital expenditure is expected to be US$ 37 million, consisting of 4 development wells (Khurbet East Nos. 8, 9, 10 and 11 at a total cost of US$ 14 million), full field development facilities for Khurbet East (US$ 20 million) and miscellaneous items (US$ 3.5 million). The total cost of the full field development facilities for Khurbet East, to be incurred in 2009 and 2010, is estimated to be in the range of US$ 45 to 50 million. The Operator estimates that the Khurbet East field may be fully developed with a total of 15 production wells, including the existing 5 wells currently on production and 3 production wells expected to be drilled in 2009.

Tags: Emerald Energy Plc