Namibia


ENERGULF SECURES PETROLEUM EXPLORATION LICENSE OFFSHORE SOUTH WESTERN AFRICA

(HOUSTON) EnerGulf Resources Inc. (TSXV: ENG) is pleased to announce its wholly owned subsidiary, EnerGulf Namibia Ltd., has formally been assigned a 10% working interest in offshore Namibia Block 1711 by the Minster of Mines and Energy of the Republic of Namibia concurrent with the signing of the Petroleum Exploration License agreement in Windhoek, Namibia on March 31, 2006. Under the terms of the agreements EnerGulf has been granted a 10% working interest (paying 10% of the exploration and development costs), being a 9.5% net revenue interest (after the underlying royalty to Namibia). The operator of the block is Sintezneftegaz Namibia Ltd. , a subsidiary of Sintezneftegaz, a Federation of Russia oil and gas company based in Moscow, with a 70% interest. Sintezneftegaz has exploration interests in the Barents Sea, oil and gas production in Siberia, and various oil field supply businesses. PetroSA, South Africa’s national oil company, will hold a 10% working interest. NAMCOR, the national oil company of Namibia, will have a 7% carried interest and the local BEE group will have a 3% carried interest. Sintezneftegaz will be solely responsible for carrying the NAMCOR and BEE group’s interests. The Exploration License granted is for a term of four years, with two additional two year renewal exploration periods. The initial work program provides for geophysical work in year one and requires the drilling of two exploration wells (the first well to be drilled by at least year two). The minimum exploration expenditure over the initial four year period is US$84,000,000, and a further US$37,000,000 combined over both two year renewal periods. Block 1711 is situated in the Namibe basin off the northern coast of Namibia along the international boundary with Angola. Two separate exploration prospects have been identified by extensive modern seismic data on the 8,931-square-kilometre block, being the Kunene and Hartmann prospects. There are other undeveloped leads. The Kunene prospect is defined by a 650-square-kilometre 3-D seismic survey. The structure forms a four-way dip closure covering 95 square kilometers, with vertical closure of approximately 650 meters. A number of direct hydrocarbon indicators, including gas chimneys and bottom simulating reflectors (BSR), have been identified by the seismic. The technical reviews by the previous license holder also indicate that an oil slick has also been identified by satellite radar situated down current from the Kunene prospect. The Hartmann prospect has been delineated by extensive 2-D seismic. It is identified as a stratigraphic trap with an area of 343 square kilometers and approximately 1,600 meters of vertical relief. The target carbonate reservoir section is believed to be the same age as that of the Kunene prospect. Commenting on the signing of Block 1711, Bill St. John, Ph. D, EnerGulf's adviser for African and other international oil and gas exploration operations, member of the American Association of Petroleum Geologists (AAPG), states: "Block 1711 contains the most attractive undrilled structure that I have seen in over 40 years of exploring for oil and gas internationally. In my opinion, each of the Kunene and the Hartmann prospects are of a sufficient size to have the potential to contain a 'giant field,' being over 500 million barrels (as defined by AAPG)”. Further commenting, EnerGulf Chairman of the Board, Jeff Greenblum said, “We are delighted after over a year of extensive analysis and negotiations, to announce the formal signing of the Petroleum Exploration License for Block 1711 and to be positioned in Namibia. We believe Block 1711 has the geological earmarks to potentially hold a world class hydrocarbon resource. We are looking forward to working with our new partners and are pleased to further move forward our Pan-African business plan of building a strong portfolio of high impact exploration opportunities.”


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