Melrose provides Egypt update

Melrose Resources plc provides an update on its operational activities in Egypt.

The Company announces that first production was established at the West Dikirnis field in the onshore Nile Delta on 30 November 2007. The field development was completed within 12 months of project sanction and came in under budget. The initial production stream is from the West Dikirnis No.2 well and it is anticipated that output from the field will reach a 10,000 barrels of oil per day by the end of the year as additional wells are opened for production.

The EDC-53 drilling rig has recently completed operations on the Buhut No.1 well targeting a Qawasim exploration prospect located on the El Mansoura concession. The well encountered good reservoir sands with minor gas shows but was not considered to be commercially viable as a producer and has been plugged and abandoned. The drilling rig is now moving to drill another Qawasim prospect, West Zahira, which has unrisked mean reserves of 124 billion cubic feet of gas plus hydrocarbon liquids potential and an estimated 30% chance of success.

The EDC-9 drilling rig draw works were damaged during transportation between drilling locations. While this has caused delays to the drilling programme in the short term, a replacement draw works has been sourced and is expected to be installed by February 2008. In light of this, a third drilling rig has been contracted to start operations on the El Mansoura concession during the first quarter of 2008 and any lost time in the drilling programme will be made up in the first half of 2008.