Circle Oil Granted Extension for Oman Exploration

- Circle Oil Granted Extension for Oman Exploration

Monday, September 05, 2011
Circle Oil plc

Circle Oil announced the following operational update on its activities in Blocks 49 and 52 in Oman.

Block 49

Circle confirmed that the Ministry of Oil and Gas, Oman has granted an extension to the exploration period for our onshore Block 49 now ending December 26, 2012. Within this time frame, Circle will be required to complete an additional 2,500 line kilometers of closely spaced 2D seismic survey and drill one exploration well. The seismic program is to be acquired in the south-eastern part of the permit, north-east of and adjacent to the 3D survey which was completed in 2010. This survey is intended to provide a better understanding of the whole southern permit area, and outline potential additional drilling targets. It will complement the existing dataset, and cover an area with sparse coverage of legacy 2D lines. Acquisition parameters for the survey will draw on the experience obtained during the acquisition and processing of the 3D survey.

Block 49, covering an area of over 15,438 square kilometers, lies about 700 kilometers south-west of Muscat in a relatively unexplored area of Southern Oman. The concession agreement includes the right of conversion to a production license of 30 years in the event of commercial discoveries. Circle Oil Oman Ltd is the operator of Block 49 with a 100% working interest.

Block 52

The processing of the 5,026 line kilometers of marine 2D seismic, recorded from December 2010 to February 2011, has been completed. The processed data received to date are of a significantly improved quality over the historic seismic data. Interpretations have confirmed the presence of multiple structures and potential targets for exploration drilling. As result a farm-out process has recently been initiated using both internal data rooms and an external agency. The farm-out process is aimed at seeking a partner(s) to drill a commitment well in Block 52 within the next 18 months.

Circle's interpretations detailed in the farmout package in Block 52 have identified several promising play types in stratigraphy ranging in age from Pre-Cambrian to Tertiary, but the offshore Outer Sawquirah Area of Late Cretaceous to Palaeogene structural closures is considered the most prospective.

The identified principal reservoir intervals are Palaeogene Hadhramaut carbonates and clastics and late Cretaceous Aruma Group carbonates. Potential source rocks are considered to be Lower Hadhramaut and Aruma shales with additional potential in the basinal Jurassic Sahtan Group and the Infra-Cambrian Huqf Super Group. Sealing units for potential traps are provided by extensive shale units of the Fars, Hadhramaut and Aruma groups.

Nine large four way dip closed prospects are recognized in the Outer Sawqirah Area. Internal pre-drill deterministic STOIIP of these nine prospects for the most likely unrisked case is calculated as 7,264 MMBO. The associated ultimate recoverable resources for the nine prospects are estimated internally as 2,179 MMBO.

The water depths for proposed drilling locations on the nine prospects range from 724 to 956 m and target depths range from 1,490 to 2,850 m. The largest individual prospect, presently designated as Prospect A1, is situated in a water depth of approximately 769 m, with an internally estimated deterministic most likely STOIIP of 2,435 MMBO and associated most likely ultimate recoverable resources of 731 MMBO, with depth to top target at 1,490 m.

The Company would emphasize the point that the pre-drill deterministic estimates of STOIIP and resources are based on the information and interpretations available at time of issue and are made based on Circle's management deterministic best estimates. There can be no assurance that such estimates will prove to be accurate as future technical evaluations and results, including drilling results, could lead to variations or differ materially from those indicated in this release.

As expected, further exploration work is necessary and the Company is now seeking partners to join in this effort. Further announcements will be made in due course.

Block 52, covering an area of over 63,460 square kilometers, lies about 500 kilometers SSW of Muscat in an underexplored area of offshore Southern Oman. The concession agreement includes the right of conversion to a production license of 30 years in the event of commercial discoveries. Circle Oil Oman Offshore Ltd is the operator of Block 52 with a 100% working interest.

Commenting Prof. Chris Green, CEO, said, "The granting of the extension for Block 49 will allow Circle to further evaluate drilling opportunities within the southern area of the permit. In Block 52, the new seismic is of excellent quality and multiple closures, including some leads we mapped previously, have been firmed up as prospects. The interpretations coming from Block 52 seismic have allowed us to prepare a comprehensive farm-out package."

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Circle Oil Updates Ops at Geyad Field in Egypt

- Circle Oil Updates Ops at Geyad Field in Egypt

Wednesday, August 31, 2011
Circle Oil plc

Circle Oil announced the following update regarding the Geyad-5X water injection well drilled to support production in the Geyad Field.

Geyad-5X

Geyad-5X, located to the south-west of the field and downdip of the Geyad-1X ST discovery well in the Geyad Development Lease, was drilled to 7,350 ft MD in the Upper Rudeis. The main objective for this well was to appraise the Shagar and Rahmi sandstones of the Kareem Formation in a downdip location and to provide water injection to support oil production from the updip Geyad field wells. The Shagar sands were encountered with 15 ft MD of net reservoir, an average porosity of 14% and perforations made between 6,510 and 6,525 ft MD. The Rahmi sands were encountered with 15 ft MD of net reservoir, an average of 13% porosity and perforations made between 6,583 and 6,899 ft MD. As expected, below the field oil-water contact both sands were found to be water bearing. The well has been completed as an injector.

The rig has now been mobilized to drill the water injector well Al Ola-2, located on the south-eastern flank of the Al Amir SE field, downdip of the Al Ola-1X producer. The well is planned to appraise both the Shagar and Rahmi sands for injection in that location.

The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 260 square kilometers, lies about 300 kilometers southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production license of 20 years, plus extensions, in the event of commercial discoveries. The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

Prof Chris Green, CEO, said, "I am pleased to report another successful result as the partnership's plans in NW Gemsa continue on schedule. The rig will now move to start drilling the Al Ola-2 injector well situated on the Al Amir SE field. The water injection program is part of the continuing plan to increase production rates for the medium and long term."

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Circle Oil Completes Al Amir Water Injector Well

- Circle Oil Completes Al Amir Water Injector Well

Friday, July 22, 2011
Circle Oil plc

Circle Oil announced the following update regarding the Al Amir SE-8X water injection well together with details on the imminent drilling of Geyad-5X, a water injector, to support production in the Geyad Field.

Al Amir SE-8X

Al Amir SE-8X, located to the south-west of the Al Amir SE-1X ST discovery well in the Al Amir Development Lease, was drilled to 10,750 ft MD in the Upper Rudeis. The main objective for this well was to appraise the Shagar and Rahmi sandstones of the Kareem Formation in a downdip location and to provide water injection to support oil production from the updip Al Amir SE field wells.The Shagar sands were encountered from 10,329 to 10,353 ft MD with 24 ft MD of net reservoir and up to 15% porosity. The Rahmi sands were encountered from 10,404 to 10,432 ft MD with 8 ft MD of net reservoir and up to 10% porosity. Both sands were found to be water bearing, below the field oil-water contact. Interpretation of formation pressure test results from both sands indicates communication with the updip producers and good potential for successful water injection. The well has been completed as an injector in the Rahmi sands, with the option to add the Shagar injection under a rigless operation at a later date.

Geyad-5X

The rig has now been mobilized to drill the water injector well Geyad-5X, located on the western flank of the Geyad field, downdip of the Geyad - 3X and Geyad-1XST producers. The well is planned to appraise both the Shagar and Rahmi sands for injection.

The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 260 square kilometers, lies about 300 kilometers southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production license of 20 years, plus extensions, in the event of commercial discoveries. The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

Prof Chris Green, CEO, said, "I am pleased to report another successful result as the partnership's plans in NW Gemsa remain on schedule. The rig now has now moved to start drilling the first injector well on the Geyad field as part of the development plan to increase production rates for the medium and long term."

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Circle Star Acquires Tx. Assets

- Circle Star Acquires Tx. Asset

Wednesday, July 06, 2011
Circle Star Energy Corp.

Circle Star has acquired interests in certain oil and gas producing assets in Texas.

The Company has acquired mineral interests, overriding royalty interests and non-operated working interests in a set of producing and non-producing oil and gas assets throughout Texas comprised of over 30,000 gross acres. The acquisition includes production from the Eagle Ford Shale, Austin Chalk, Wolfcamp, Woodbine and Deep Bossier formations. EnCana Oil & Gas (USA), Inc., Chesapeake Energy, Newfield Exploration Company, CML Exploration, LLC and Petromax Operating are operators of the respective assets. Revenue from the properties averaged more than $125,000 per month from January to May 2011.

In related news, the Company welcomes Mr. S. Jeffrey Johnson to the board of directors where he will assume the role of Non-Executive Chairman. Mr. Johnson has over 22 years of experience in the oil & gas business. Most recently, Mr. Johnson served as the Chairman of the Board and Chief Executive Officer of Cano Petroleum, positions he held from June 2004 to February 2011 and May 2004 to February 20011, respectively. Prior to Cano, Mr. Johnson owned and operated 2 private oil companies from 1993-2003 and was a Vice President of Touchstone Capital from 1990-1993.

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Circle Oil Sees Increase in 2011 Recoverable Resources

- Circle Oil Sees Increase in 2011 Recoverable Resources

Wednesday, June 08, 2011
Circle Oil plc

Circle Oil announced the 2011 update to Ultimate Recoverable Resources ("URR")1 for the NW Gemsa Concession, Egypt, and the Sebou Permit, Morocco, which indicates a significant increase over the 2010 URR estimates for both permits. The updated gross estimates were compiled by RPS Energy ("RPS"),an independent consultancy specializing in petroleum and gas reservoir evaluation. The estimates use the 2007 Petroleum Resources Management System ("PRMS") produced by SPE/WPC/AAPG/SPEE and are set out in the tables below together with further explanation of the results.

Egypt

The new resource estimates take account of the results of the drilling and development activity up to but not including Geyad-3.

The RPS report2 states that the most likely (P50) URR for the discoveries in NW Gemsa in Al Amir SE, Geyad plus South Gharib in Al Amir are 30.0MMBO and 34.2 bcf of gas, which together equates to 35.9MMBOE gross (14.4MMBOE net).3 This constitutes a 49% increase over the 2010 figure of 24.1MMBOE gross (9.6MMBOE net). The most likely unrisked URR in the Kareem reservoir in the Al Amir prospect is 3.9 MMBOE gross with a geological probability of success of 84%, as assigned by RPS. The Al Amir Kareem area volume was included in the Al Amir SE URR in the 2010 report, as at that time it was considered as an adjoining portion to Al Amir SE which had and has still not been drilled, but could be reasonably judged to be economically productive on the basis of geological, geophysical and engineering data. The 2011 total most likely (P50) recoverable resources estimate, to compare like with like areas (including Al Amir Kareem) with the 2010 report, is 33.2MMBO and 38.1 bcf of gas, which together equates to 39.8MMBOE gross (15.9MMBOE net). This constitutes a 65.1% increase over the 2010 figure of 24.1MMBOE gross (9.6MMBOE net).

The upside estimate (P10) for the discovered fields increases to 54.5MMBOE gross (21.8MMBOE net) which represents a 33% increase over the 2010 figure of 41.0MMBOE (16.4MMBOE net). The unrisked upside estimate of URR in the Kareem reservoir in the Al Amir prospect is 9.3MMBOE gross (3.7MMBOE net). The 2011 total upside (P10) recoverable resources estimate, to compare like with like areas, is 63.8MMBOE gross (25.5MMBOE net), which constitutes a 55.6% increase over the 2010 figure of 41.0MMBOE gross (16.4MMBOE net).

The increase in URR is due to a large increase in the estimated recovery factor from the Kareem reservoir which results from observation of well production performance data and the positive effect of the planned installation of gas production and water injection facilities, which are expected to be completed by the end of 2011.

The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 260 square kilometres, lies about 300 kilometres southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production licence of 20 years, plus extensions, in the event of commercial discoveries.

Morocco

The new resource estimates take account of the results of the drilling up to and including KSR-11.

The RPS estimate of most likely (P50) URR of gas is 30.6 bcf gross (23.0 bcf net).This, together with our own internal estimate of gas production and resources remaining to be produced in areas not included in the report of 1.5 bcf gross, gives a total of 32.1 bcf gross (23.9 bcf net) URR for the Sebou block. This represents a significant increase in gas resources of 83.4% over the 2010 figure of 17.5 bcf gross (13.0 bcf net).

The RPS estimate of upside (P10) URR is 41.7 bcf gross (31.3 bcf net) which together with our own internal estimate of resources in areas not included in the report of 1.5 bcf gross, gives a total of 43.2 bcf gross (32.2 bcf net) for 2011, which represents a 66% increase over the 2010 figure of 26.0 bcf gross (19.3 bcf net).

In the Sebou concession, Circle has a 75% share and ONHYM, the Moroccan State oil company, has a 25% share. In the Oulad N'zala concession, Circle has a 60% share and ONHYM has a 40% share. Both concessions include the right of conversion to a production licence of 25 years, plus extensions in the event of commercial discoveries.

The Sebou permit lies to the north-east of Rabat in the Rharb Basin in Morocco. The Rharb Basin is a foredeep basin located in the external zone of the Rif Folded belt.

Prof Chris Green, CEO, said, "I am very pleased to report this significant uplift in resource numbers for the oil and gas discoveries on our NW Gemsa and Sebou blocks. This is testimony to both the continuing advancement of the partnership's development and appraisal programme in Egypt and the success of our exploration drilling in Morocco. It also highlights the way in which the Company has been utilizing the funds raised from the placing in 2010 to create value for our shareholders. Our drilling success rate over the past three years has been excellent. We continue with our task of increasing both our production capability and resource base."

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Circle Commences Surveying Work at Moroccan Permits

- Circle Commences Surveying Work at Moroccan Permits

Thursday, May 26, 2011
Circle Oil plc

Circle announced the commencement of surveying work and mobilization for the new seismic acquisition campaign within our permits in the Rharb Basin, Morocco.

The campaign is scheduled to acquire a further 120 square kilometers of 3D data as well as 24 full fold line kilometers of 2D and is expected to last 4-5 months.

The data will be subsequently processed and interpreted for use in the identification and prioritization of drilling targets for the third drilling campaign presently scheduled to commence in early 2012.

Senior Management Appointment

Circle also announced the appointment of Dr. Mohamed El Mostaine as Operations Manager for Circle Oil Maroc Ltd. Dr. El Mostaine holds a Doctorate in Geology and Petroleum Geology Engineering from the French Institute of Petroleum. He joined the National Office of Hydrocarbons and Mines (ONHYM) in 1981. From 2006 until taking up his position with Circle, Dr. El Mostaine was Director of Exploration Petroleum for ONHYM. He is also a member of the American Association of Petroleum Geologists (AAPG), the Society of Petroleum Engineers (SPE) and is the President of the Moroccan Association of Petroleum Geologists (MAPG).

Dr. El Mostaine will initially manage the new seismic acquisition campaign and contribute to both the planning and technical studies to be produced in preparation for the third drilling campaign in the Rharb Basin.

In combination with other senior Circle staff and our country managers in Morocco, Tunisia and Oman, he will also contribute to identifying, evaluating and securing new business opportunities in Circle's geographic area of interest.

Commenting on the appointment Prof. Chris Green, CEO, said, "We welcome Mohamed to Circle. With his extensive experience and knowledge of North Africa we look forward to his contribution to Circle's growth."

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Circle Oil Prepares for Production at Geyad-3 Well

- Circle Oil Prepares for Production at Geyad-3 Well

Monday, May 23, 2011
Circle Oil plc

Circle Oil announced an update regarding the Geyad-3 appraisal/development well together with details on the future development of the NW Gemsa Concession.

Geyad-3C Update

Geyad-3, located to the south-east of the Geyad-1X ST well in the Geyad Development Lease, was drilled to 5,635 ft MD in the Upper Rudeis. The main objective for this well was to appraise and bring into production the oil bearing Shagar and Rahmi sandstones of the Kareem Formation. The Shagar sands were encountered from 5,333 to 5,347 ft MD with 14 ft of net oil pay.

Circle announced that the Shagar interval was tested at a sustained rate of 1,316 bopd and 1.26 MMscf/d of gas on a 24/64" choke and the well will be completed for production. The underlying Rahmi sands were encountered but found to be of poor reservoir quality and were not tested. A secondary objective of the Belayim sands in Geyad-3 well was also encountered with 5 ft of calculated net pay, but it was decided not to test this interval at the present time.

The Geyad-3 well has proved up the South East extension of the field and added further confirmation of the field geometry. The next well proposed for the Geyad field is a westerly peripheral injector to be drilled later in 2011.

The well is currently rigging down and the rig is preparing to mobilize to drill the injector well Al Amir SE-8X, located on the South West flank of the Al Amir SE field.

The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 260 square kilometres, lies about 300 kilometres southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production licence of 20 years, plus extensions, in the event of commercial discoveries. The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

Prof Chris Green, CEO, said, "I am pleased to report another successful result as the partnership's plans in NW Gemsa remain on schedule. The rig now moves to start drilling the second injector well on Al Amir SE as part of the development plan to increase production rates for the medium and long term."

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Circle Oil Notes Drilling Preps at Egyptian Well

Circle Oil Notes Drilling Preps at Egyptian Well

Tuesday, April 19, 2011
Circle Oil plc

Circle Oil announced an update regarding the Geyad-3C appraisal/development well together with details on the future development of the NW Gemsa Concession.

Geyad-3C Update

Geyad-3C, located to the south-east of the Geyad-1X ST well in the Geyad Development Lease, is planned to be drilled to a total depth ("TD") of 5,911 ft measured depth ("MD") in the Upper Rudeis. The well is currently rigging up and preparing to commence drilling. The main objective for this well is to appraise and bring into production the oil bearing Shagar and Rahmi sandstones of the Kareem Formation. In the Geyad-1X ST well both zones were tested in May 2009 at a combined sustained rate of 2,809 bopd and 3.04 MMscf/d of gas from the Rahmi sandstones on a 64/64" choke and the well was put on production. In Geyad-2 ST, the Shagar sands were tested at a sustained rate of 3,850 bopd and 4.62 MMscf/d of gas on a 48/64" choke and the well was put on production. Secondary objectives of the Geyad 3-C well are to penetrate and evaluate the hydrocarbon potential of the overlying South Gharib and Belayim formations.

NW Gemsa Concession

Following the drilling of Geyad-3C, further intensive exploration, appraisal and development drilling is planned over the next eighteen months. A program of water injection wells will be drilled, as required, to support oil production in both the Al Amir SE and Geyad fields.

The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 260 square kilometers, lies about 300 kilometers southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production license of 20 years, plus extensions, in the event of commercial discoveries. The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

Circle Oil Hits Gas Pay in Morocco

Circle Oil Hits Gas Pay in Morocco

Friday, April 15, 2011
Circle Oil plc

Circle Oil announced that the KSR-11 exploration well has been drilled, logged and successfully tested in the Sebou Permit, Rharb Basin, Morocco.

The Company confirms a gas discovery in the Main Intra Hoot target and secondary targets available for future testing in the Mid and Base Guebbas sands. The well tested gas at a sustained rate of 4.0 mmscf/d on a 16/64" choke from the Intra Hoot. The perforated Intra Hoot zone of 17.9 meters at 1,761.2-1,779.1 meters MD has a calculated net gas pay of 11.6 meters.

The Base Guebbas zone of 37.7 meters at 1,636.0-1,673.7 meters MD has a calculated net gas pay of 5.5 meters. The Mid Guebbas zone of 22.8 meters at 1,464.1-1,486.9 meters MD has a calculated net gas pay of 4.1 meters. The Guebbas Zones will be tested at a later date following production and depletion of the Intra Hoot producing zone.

The well is being completed as a potential producer.

A full technical evaluation of all the results of the well is underway. This will allow for future planning as a precursor to further assessment of the resource, including conducting an extended well test to give a more complete estimation of the reserves.

The drilling rig is now being demobilized to end the 2010-2011 drilling campaign. Work is underway for consolidation of the results of this campaign together with planning for the next drilling campaign. The preparations for Circle's third Moroccan drilling campaign include the acquisition of a new 3D seismic survey over areas of Circle's permits not previously covered by 3D seismic.

In parallel, recent engineering testing of underground crossings of public transport infrastructure have been successfully completed as part of the construction preparation for the new 8-inch pipeline. Work on the pipeline is progressing in line with management's expectations.

The Sebou permit lies to the north-east of Rabat in the Rharb Basin in Morocco. The Rharb Basin is a foredeep basin located in the external zone of the Rif Folded belt. The concession agreement, in which Circle has a 75% share and ONHYM, the Moroccan State oil company, has a 25% share, includes the right of conversion to a production license of 25 years, plus extensions in the event of commercial discoveries.

Prof. Chris Green, CEO, said, "I am very pleased to be able to report that we have yet again continued our drilling success in Morocco's Rharb Basin. The KSR-11 well has been completed and, when required, will be available for future production. We tested this well at a small restricted choke size and it still achieved a good flow rate with very quick pressure build up. The second drilling campaign has been very successful and we have increased our ability to both supply gas and incrementally increase our resources in line with the business plan for the area. Everyone has worked hard to achieve this result and it is definitely appropriate to thank staff and our service companies for their efforts and also to thank ONHYM for their continuing support to our endeavors."

Circle Oil Briefs Operations at Al Amir Lease

Circle Oil Briefs Operations at Al Amir Lease

Monday, April 11, 2011

Circle Oil plc

Circle Oil announced an update regarding the Al Amir SE-7X water injector well located to the west of the Al Amir SE-4X well in the Al Amir Development Lease. Al Amir SE-7X, which started drilling on 27 November 2010, has been successfully sidetracked and has now reached target depth ("TD") at 15,600 ft measured depth ("MD") in the Lower Rudeis.

The main objectives for this well were to provide water injection support into the Kareem sands and to delineate the Kareem oil-water contact, which is required for technical reasons including resource estimation. The Kareem sands were encountered between 10,664 and 10,852 ft MD and these have been successfully cased off.

The Main Shagar Sands, encountered between 10,738 and 10,770 ft MD, were water bearing and of excellent reservoir quality. As a result Al Amir SE-7X should provide a good initial water injection well. The overlying sand stringers from 10,664 to 10,718 ft MD have indicated oil saturations on logs.

This places the deepest oil in Al Amir SE for the Kareem at approximately 10,200 ft Sub Surface, which positively corresponds with the latest estimates for the oil-water contact calculated using formation pressure data. Additional work is to be undertaken to refine this elevation. The well has been plugged back to 11,180 ft MD and is being completed as a water injector in the Kareem sands to support the updip oil producers. A further development well and water injection wells form the immediate drilling program for the Al Amir SE field.

The secondary objective of the well was to evaluate the Lower Rudeis thin sand stringers with indicated hydrocarbon saturations between 15,553 and 15,567 ft MD, which were previously encountered in the Al Amir SE-6X well. Log analysis by the operator identified 6 ft of pay with an average 10% porosity and a hydrocarbon saturation of 68%.

The decision was taken not to test this interval due to mechanical problems, but to conduct further drilling to properly evaluate the productivity of the Lower Rudeis sands.

In the drilling of the up-hole section of Al Amir SE-7X, sand stringers with potential hydrocarbon saturations containing 6 ft of potential pay were encountered in the South Gharib (5,634 to 5,645 ft MD) and a further 4 ft of potential pay in the Belayim (8,400 to 8,404 ft MD). These zones will be the subject of further evaluation in future drilling which will be undertaken to properly evaluate these positive occurrences for additional hydrocarbons in the NW Gemsa block.

During 2010 four successful wells were drilled and completed:

• Geyad-2X ST completed as a producer in February;
• Al Amir SE-5X completed as a producer in March;
• Al Amir SE-6X completed as a producer in July; and
• Al Ola-1X completed as a producer in December.

Further intensive exploration, appraisal and development drilling is planned over the next eighteen months. This will include drilling water injection wells to support the oil production in both the Al Amir SE and Geyad fields as required.

In addition, construction is now underway to construct facilities together with an 8-inch gas pipeline to the nearby facilities for gas export and the sale of gas and associated liquids. These facilities are expected to be completed by year end, with an associated increase in gas and liquids production.

The current production rate from the NW Gemsa fields of Geyad and Al Amir SE is approximately 7,500 bopd gross as fluid off-take from the fields is controlled in line with best reservoir management practice as the water flood is initiated, becomes operational and is proven to be effective in maximizing recovery rates. By mid 2012 the production rate is expected to rise to approximately 12,000 bopd gross as water flood operations become effective.

Gross production from start up in February 2009 through to the end of February 2011 was 4.6 MMBO. Work is currently underway on an independent third party report on ultimate recoverable resources for NW Gemsa. The results are expected during the second quarter of 2011 and will be incorporated within the Annual Report for 2010. The NW Gemsa permit, in which Circle Oil holds a 40% interest, has been a very successful venture for the Company.

The NW Gemsa concession, containing the Al-Amir and Geyad Development Leases, covering an area of over 260 square kilometers, lies about 300 kilometers southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production license of 20 years, plus extensions, in the event of commercial discoveries.

The North West Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).