26 June 2008
EnCore Oil plc ("EnCore" or "the Company"): Activity Update
EnCore Oil plc (LSE: EO.) is pleased to provide an update on current and planned activity.
Drilling Programme
Barbarossa
The 'Barbarossa' appraisal well (47/9c-5) commenced drilling in late February 2008. EnCore's costs are being carried for the initial vertical well and all testing and mobilisation and demobilisation of the rig. EnCore has contributed to the development and completion section of the well costs. The horizontal well section has been completed and the Company expects the results of the testing programme shortly.
EnCore has a 10 per cent. equity interest (5 per cent. subject to certain buy-back rights) and Venture Production plc ("Venture") is operator. Venture is currently planning to develop Barbarossa along with the adjacent Channon discovery.
Cobra
In May 2007, EnCore announced that its first operated well 'Cobra' (48/2c-5) tested at dry gas rate of 1.1 million standard cubic feet per day and established a total gas column greater than 350 feet. The results indicate a significant volume in place but likely requiring reservoir stimulation (a fraccing programme) to make the discovery commercial.
EnCore plans to initiate a feasibility study to examine the economic and technical potential for development of the field through a suitable well fracture stimulation programme. This study is subject to co-venturer approval. In the event of a positive outcome from these studies, it is likely that further drilling activity will commence in late 2009.
EnCore is operator with a 20 per cent. equity interest.
Breagh
In November 2007, EnCore announced that the 'Breagh' appraisal well (42/13-3) successfully tested dry gas at a maximum rate of 17.6 million standard cubic feet per day and established a total gas column of 460 feet. The well was suspended as a potential gas producer.
Future activity will centre on the appraisal of the East Breagh structure. The partnership plans to establish whether or not this is a contiguous or separate part of the current Breagh accumulation and if separate, whether or not it contains producible hydrocarbons. A second well on West Breagh will seek to establish if commercial flow rates can be achieved from a horizontal well bore. Further 3D seismic reprocessing has been completed in preparation for both appraisal wells, and drilling is expected to commence in late July using the Ensco 70 jack-up rig. Final timing will be subject to the requirements of the current drilling operations of Ensco 70.
EnCore has a 15 per cent. equity interest and Sterling Resources Ltd. is operator.
Bowstring East (aka 'Cladhan')
The 'Bowstring East' (also known as 'Cladhan') prospect is a light oil target on UKCS block 210/29a which is scheduled to start drilling in the 4th quarter of 2008. The semi-submersible rig Sedco 704 has been secured for this exploration drilling programme. Final timing will be subject to the requirements on the current drilling operations for Sedco 704.
EnCore holds a 26.6 per cent. equity interest and will be paying 20 per cent. up to the capped drilling costs and at its working interest level thereafter. Sterling Resources Ltd. is operator.
Catcher and Bennett
The timetable for the drilling of 'Catcher' is not yet certain, although the site survey is currently being acquired and it is expected that it will be drilled in the second half of 2008 or Q1 2009. Timing is subject to the operator's, Oilexco Inc, ongoing drilling programme in the Central North Sea. The 'Bennett' well is likely to be drilled in the first half of 2009, subject to specific rig availability.
EnCore holds a 35 per cent. interest in the 'Catcher' prospect although EnCore's contribution to the well costs will be less than this. EnCore currently holds 70 per cent. equity in the Bennett prospect. Wintershall farmed into the licence on a promote basis and has become operator.
Ireland: Old Head of Kinsale and Schull
The partnership has recently acquired additional seismic data over both fields to better define both the full extent of the accumulations and to firm up additional prospectivity adjacent to both discoveries. Finalisation of the current sale process involving the Kinsale and Seven Heads fields by Marathon will be key to progressing these developments in the near term.
New Venture and Commercial Activity
Amstel Field
EnCore is currently in discussions concerning the possible sale of EnCore Nederland B.V., whose principal asset is 10 per cent. of the Amstel field.
25th Offshore Licensing Round Applications
EnCore made a number of applications in the UKCS 25th Licence Round, both as operator and co-venturer. We expect awards to be made by BERR later in the year.
UK Onshore
EnCore has been offered the award of two licences 13th Landward Licensing Round. PEDL 240 is contiguous with our existing licences held with Northern Petroleum is on the Isle of Wight, and the second PEDL 253 is located in Lincolnshire around the area of Biscathorpe.
More recently the group has received planning permission for the drilling of Markwells Wood (formerly East Horndean), which is expected to be drilled in 2009.
Following a number of informal expressions of interest in our onshore acreage, EnCore is currently reviewing its position on both onshore UK and France.
Gas Storage
EnCore has received, and continues to receive expressions of interest in participating in the proposed Esmond and Gordon Gas Storage project. As previously announced, the key remaining information required to fully define the size and scope of the project will be achieved by the drilling of a well into the Esmond field.
As part of the commercial arrangements between Star Energy ("Star", now a subsidiary of Petronas) and EnCore, Star will bear the cost of the drilling of this well. Star is currently in discussions with a third party for the use of a jack up rig and, subject to the successful finalisation of these discussions, it is expected that the well could be drilled in a late August or early September time frame. Once the results of this well are known, and assuming they come within the expected range of outcomes then it is likely that EnCore may seek to sell its 100 per cent. subsidiary, EnCore Gas Storage Limited. Although it has not been entirely ruled out, it is unlikely that the company would seek to demerge EnCore Gas Storage Ltd, as the Company believes its strategic aims of returning value to shareholders can now be achieved without the additional cost and time involved in a listing and demerger.
Alan Booth, EnCore's Chief Executive Officer, commented:
"We look forward to the next six months which will be key in defining the success we can deliver to our shareholders. The results of the Esmond well will be of particular importance in this regard. We will be seeking to tailor our E&P portfolio to focus our capital on those projects that can have a material impact on our value, whilst disposing of, or reducing, our exposure to those activities which are less material. We will continue to seek all opportunities to return value back to our shareholders as appropriate, in whatever way is most effective and efficient."
For further information, please contact:
EnCore Oil plc
www.encoreoil.co.uk
Alan Booth, Chief Executive Officer
+44 (0)20 7224 4546
Eugene Whyms, Chief Financial Officer
Aquila Financial Limited
www.aquila-financial.com
Peter Reilly
+44 (0)118 979 4100
Hanson Westhouse Limited
Tim Feather
+44 (0)113 246 2610
KBC Peel Hunt
Jonathan Marren
+44 (0)20 7418 8900
Notes to Editors:
EnCore Oil plc (LSE:EO.) is an oil and gas exploration and production (E&P) company quoted on AIM.
At EnCore, it is not the Company's aim to build a full cycle E&P company. The principal strategy is to create shareholder value through the successful exploration and appraisal of prospects and discoveries. The Company will seek to monetise or exchange the asset at the appropriate point in its life cycle and return value directly to shareholders wherever possible.
EnCore has an experienced and proven management team, a number of whom were responsible for the discovery of the Buzzard field in the UK North Sea, which currently produces 10 per cent. of the UK's total oil production.
All EnCore's commercial and material technical evaluations are undertaken in-house by the EnCore team. This brings both continuity to the management and development of the assets and an ownership that is vital to unearth the best and most creative new ideas and opportunities.
EnCore currently holds a balanced portfolio of interests in licences both on and offshore, primarily focused on the UKCS.
www.encoreoil.co.uk
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