Beach Petroleum Limited (ASX:BPT) Successful Oil Flow Tests On Target For Production Start-Up In Egypt

Adelaide, Nov 25, 2009 AEST (ABN Newswire) - Beach Petroleum Limited (ASX:BPT)(PINK:BEPTF) successful oil well flow rates from its offshore Gulf of Suez project could produce Beach Petroleum Ltd's first international oil production in the first half of next year.

Beach Petroleum said the NS377-3 oil field development well in the North Shadwan block had flowed at rates up to 1,400 barrels of oil per day (bopd), pointing to likely initial production rates of approximately 1,500 to 2,000 bopd.

The NS377-3 well is the first development well in the NS377 and NS385 ("Nearshore") oil fields in the North Shadwan block, in which Beach has a 20% joint venture interest with BP (Operator), Tri-Ocean Energy and the State-owned Egyptian General Petroleum Company.

" The North Shadwan project is on target to achieve first production by the June quarter of 2010," Beach Petroleum's Chief Executive Officer, Mr Hector Gordon, said today.

"To reach first oil production just 18 months after our acquisition of this Gulf of Suez interest will be a significant achievement. It is the first key step in building a significant Beach Petroleum business in Egypt," Mr Gordon said.

"Our goal is to grow our reserves position to at least 20 million barrels of oil equivalent in Egypt over the next five years, predominantly focusing on the shallow waters of the Gulf of Suez that have brought this initial success, as well as some onshore projects," he said.

"We remain very optimistic about our ability to develop substantial, low-cost, oil production from nearshore and onshore oil fields."

Beach Petroleum - already a prolific Australian oil and gas producer, acquired its North Shadwan Concession interest last year.

The concession contains three existing, undeveloped oil discoveries and several attractive exploration prospects.

The successful NS377-3 development well is the first in a drilling program of up to 4 wells on the near-shore North Shadwan blocks 377 and 385.

The next well on the 377 block - the Teen-1 exploration well - is expected to be followed by another well in the NS377 field (NS377-5). A different rig will then be used to drill the NS385-2 development well in the NS385 field. Mr Gordon said the full development of the NS385 field could ultimately involve a further three wells.

"The combined ultimate oil recovery from these fields is expected to be in the range of 10 to 15 million barrels of oil. Success in the Teen-1 exploration well could substantially add to that amount" Mr Gordon said.

The North Shadwan near-shore oil fields - discovered in the 1980's by Amoco - are located in water depths of 20 metres to 40 metres, two to four kilometres offshore from the eastern shore of the Gulf of Suez.

The shallow water location of the fields enables development by deviated drilling from onshore where all production facilities are located, for delivery of the oil via an 11 kilometre onshore pipeline to an established processing plant.

Full development for the North Shadwan Nearshore oil fields is expected to cost up to US$60 million.

As previously reported, the North Shadwan joint venture has plugged and abandoned another well drilled in the concession, the NS394-3 (Burtocal North) offshore exploration well, after it failed to encounter significant hydrocarbons.

Mr Gordon said further interpretation of the results from this well was required before the joint venturers decided future plans for this discovery.

"While the North Burtocal result leaves that particular discovery unresolved, we remain very optimistic about the further potential in the North Shadwan block, as well as our South East July concession, also in the Gulf of Suez," he said.

Contact

Hector Gordon Chief Operating Officer TEL: +61-8-8338-2833