Melrose updates Bulgarian operations

Following a review of recent Black Sea drilling results, Melrose Resources plc is in the process of withdrawing from its deep water acreage position and refocusing its activities in the shallow water areas. As part of this process, the Company hopes to shortly secure the Galata Exploration Block which surrounds the Melrose operated Galata field and contains some attractive prospectivity. The Company has also now signed an agreement with Bulgargaz, the Bulgarian state-owned gas utility company, under which the two companies will conduct a joint feasibility study to evaluate the conversion of the Galata field into a gas storage facility.

In light of these business development initiatives, the Company plans to resume operations with the Atwood Southern Cross semi-submersible drilling rig to take advantage of the competitive rig day rates. The drilling rig will initially be used to complete an appraisal well, Galata East No. 2, in the eastern fault block of the Galata field. This region of the field is not being directly drained by any producing wells and the new well will provide reservoir pressure and deliverability data required for the Galata gas storage feasibility studies. The well will then be temporarily suspended for potential use as part of the gas storage scheme. Subsequently, contingent on ongoing discussions with the Bulgarian authorities, the rig may be used to drill an exploration prospect in the vicinity of the Galata field.

Following the completion of the above operations, the Company will conclude its outstanding commitments with the Southern Cross rig and prepare the unit for demobilisation out of the Black Sea. The anticipated cost for the remaining rig programme including mobilisation, drilling and demobilisation activities is approximately $15 million.