Regal Petroleum provides an update on well SV-66, the latest B-Sand well in its field development programme in Ukraine.

SV-66 Well The B-Sand sequence was perforated during 18-19 May 2010 using a combination of 4½ inch stimguns and 31/8 inch casing guns. The well was completed, the rig removed and the wellhead tiedin to the surface production infrastructure.

Unloading commenced on 2 June 2010, whereby fluid was displaced from the wellbore to a depth of 2,100m using nitrogen. The coil tubing was withdrawn and the well began to unload fluid and formation gas with no further assistance. The well was tested on 4 June 2010 at a maximum rate of 2,821 boepd (445,800 m3/d of gas and 6.2 m3/d of condensate) with a flowing tubing head pressure of 2,058 psi on a 19.5mm choke. The well is stabilising on a 24/64 inch choke against the line pressure to the production plant, and is delivering 1,392 boepd (221,760m3/d of gas and 1.4 m3/d of condensate) at 2,400 psi. The well has been choked back, to allow it to be put safely on production within the design capacity of Regal's surface production infrastructure.

Production The Company's field production rate on 5 June 2010 was 2,952 boepd (431,520 m3/d of gas and 41.4 m3/d of condensate, including SV-66 but excluding MEX-106 and SV-61, both of which are shut-in awaiting work-over and SV-10 which is shut in temporarily for the SV-66 test period).

Future Operational Plans Whilst SV-66 has produced the highest initial flow rates from Regal's new generation B-Sand wells, the flow rates delivered by the first four wells in the development programme have been highly variable. A thorough review of the completion practices adopted in the MEX-GOL-SV field development was therefore initiated in early May 2010, utilising external specialist consultants. For the B-Sand sequences above 5,500m, attention is focussed on perforation effectiveness, rock-fluid compatibility, and remedial chemical treatment. The intention is to identify whether revised completion techniques can produce consistently higher well flow rates to complement the major improvements in drilling performance that have been achieved.

For the deeper, higher pressure sequences, more work is required to evaluate fully the potential of, and the optimal development strategy for, these sequences. This work will include sub-surface studies, well and wellhead design work, facility upgrade studies and the implications of potentially higher individual well production rates for the Company's capital expenditure programme.

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