Drilling Commenced at Eni's Guendalina Gas Field

Drilling Commenced at Eni's Guendalina Gas Field

Monday, April 18, 2011
Mediterranean O&G plc

Mediterranean O&G provided the following operational update on the Guendalina Gas Field.

Italy - Concession AC 35 AG - Guendalina Gas Field (MOG interest 20%, ENI 80% and Operator)

The Operator, ENI, has informed the Company that following the installation of the platform jacket which was successfully completed in March, the Transocean jack up rig, GSF Key Manhattan, commenced drilling of the two development wells Guendalina 2D ("Gue 2D") and Guendalina 3 ("Gue 3") on 7th April 2011. The two wells are being drilled in parallel, by implementation of the skid drilling technique.

To date

• The Gue 2D well has been drilled to a depth of 400 meters. The set up of the casing has been completed.
• The Gue 3 well has been drilled to a depth of 350 meters. The set up of the casing is ongoing.

The planned total depth of the Gue 2D well is 3,290 meters (3,225 meters true vertical depth), while the planned total depth of the Gue 3 well is 3,190 meters. The Pliocene gas sand levels are expected to be encountered from a depth of about 3,000 meters.

ENI estimates that the drilling campaign, including completion of the two wells for production, will be completed by the end of July 2011. In parallel, the construction of the platform deck is progressing. Its installation is forecast to occur immediately after the completion of the development drilling phase.

Based on the information received from ENI, the Guendalina field development plan is progressing on schedule and first gas is forecast in September 2011.

Background

The Guendalina gas field is located 47 km off of the northeast coast of Italy in 42 meters of water, outside the offshore restricted area for E&P activities, which was introduced in August 2010 by the Italian Government.

ENI has independently certified 2P gas reserves of 22 Bcf (4.5 Bcf net MOG). An additional 5 Bcf (1.0 Bcf net MOG) of potential gas resources will be assessed during the current development drilling campaign by the Gue 2D well. Based on studies performed by ENI, the aggregate gas production from the field is expected to be around 20 MMcf/day (100% basis); 4MMcf/day net to the Company.

Funding

As announced on March 3, 2011 it is necessary for the Company to raise further funds to develop and progress its exploration, development and producing assets, as well as to meet the Company's working capital requirements. Negotiations for funding are on-going and the Company is hopeful it can conclude an agreement to resolve the Company's financial position satisfactorily. There can be no certainty that these discussions will result in a satisfactory outcome.

Sergio Morandi, the Company's CEO, stated, "The Guendalina development is entering the most exciting phase, with the development project remaining on schedule and progressing well.

The Guendalina development represents one of the key milestones of the Company's business plan that from the point of first gas is expected to generate significantly higher net gas production and revenues than those currently realized by the Company."