EGYPT: Pharos Energy Provides Update on its activities

Egypt

Batran-1X well result

The Batran-1X commitment exploration well, drilled on a fault bounded and three-way-closed dip prospect located 4km west of the Main Tersa-1X well, reached Total Depth on Friday 4 June.

The well encountered 52 ft (15.85m) of net oil pay in the LARG and UB sands. Additional thin pay zones may also be present in the Abu Roash “A”, “D” and “E” sands where oil shows were also encountered whilst drilling.

Pressure readings confirm that the oil-bearing reservoirs are at initial pressure.

The Batran-1X well will be completed as a potential future producer in the LARG and UB reservoir sections using a workover rig as part of El Fayum field activities ramp up phase.

The preliminary post-well in-place volume and resource estimates for the LARG and UB discoveries are 4.3 mmbbls and 430,000 bbls respectively.

El Fayum concession

The El Fayum concession prospect and lead inventory has an estimated unrisked in-place volume potential of >400 mmbbls in 40 prospects all with “more of the same geology” and covered by the existing 3D seismic. Of this total >220 mmbbls is in prospects close to existing infrastructure and 156 mmbbls is located within current long-term development leases. An additional 230 mmbbls of unrisked in place volumetric potential lies in new plays (e.g. deeper untested formations) or in leads outside of the present 3D seismic area.

The unconventional Abu Roash play, which is considered potentially prospective over the northern half of El Fayum and which was also encountered in the Batran-1X well, has a further 1.5 billion bbls of unrisked unconventional oil in place potential in tight organic-rich marls.

Future Operations Strategy

During the recent downturn, the Company’s strategy, on both the El Fayum concession and the North Beni Suef (NBS) concession to the south where Pharos also has a 100% working interest, has been to suspend drilling operations and to defer exploration expenditure to preserve cash and to protect the balance sheet. The Company is currently engaged in a farm out process run by Jefferies, to seek a partner before recommencing investment in the development of the existing discovered resource on El Fayum and the exploration potential of both blocks.

Future exploration drilling activity in the proven basins of El Fayum and NBS can be expected to focus on near field prospects close to existing facilities and prospects with new play potential. Similarly future seismic acquisition will focus on 3D seismic in the northern portion of El Fayum, once land access is granted, to mature existing leads and 2D seismic in the unexplored eastern desert portion of NBS to evaluate its frontier potential.

Ed Story, President and Chief Executive Officer, commented:

“In Egypt the Batran-1X exploration commitment well has encountered oil in the Abu Roash Lower “G” (LARG) and the Upper Bahariya (UB) reservoirs. This modest discovery reconfirms the potential for additional oil on the El Fayum concession.”