Melrose Resources plc (LSE: MRS) announced a new exploration discovery at its 100 percent controlled South East Mansoura concession in Egypt and commencement of seismic data acquisition in the country.
The oil and gas exploration and production company said the South Damas No.1 exploration well has been successfully drilled to test a prospect in the Sidi Salim formation at South East Mansoura. 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 billion cubic feet of gas equivalent (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 million cubic feet of gas equivalent per day (MMcfepd).
The capital cost, including the well completion and flow line, is estimated at 3.3 million US dollars giving an attractive unit development cost of 11 US$ cents per thousand cubic feet of gas (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 in southern Egypt, where Melrose has a 40 percent working interest. 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.