BLOCK 1711

NAMIBIA

Block 1711 is situated in the Namibe basin off the northern coast of Namibia along the international boundary with Angola. Two separate exploration prospects, the Kunene and Hartmann, have been identified by extensive modern seismic data on the 893,100 hectare (2.2 million acre) block. 

EnerGulf’s wholly owned subsidiary, EnerGulf Namibia Ltd., was formally assigned a 10% working interest in offshore Namibia Block 1711 on March 31, 2006. Under the terms of the Petroleum Agreement, EnerGulf was 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 the government of Namibia. The blocks co-venturers are: Nakor Investments Ltd. (70% - an affiliate of Sintez Group); EnerGulf Resources Inc (10%); PetroSA (10% - a national petroleum company of South Africa); NAMCOR (7% carried - the national petroleum company of Namibia) and, Kunene Energy (3% carried - the local BEE group). Nakor is solely responsible for carrying the NAMCOR and BEE group’s interests.

The Petroleum Agreement was granted for a term of four years, with two additional twoyear renewal exploration periods. The minimum exploration expenditure required 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. The co-venturers met the initial work requirement by drilling the Kunene #1 well utilizing the drill ship Deep Venture. The well reached a total depth of 5,050 metres and had significant hydrocarbon shows. EnerGulf believes the results of the operations to date have enhanced the prospectivity of Block 1711 by demonstrating that hydrocarbons are present. EnerGulf believes the Kunene #1 well information will allow EnerGulf to evaluate existing prospects and identify new leads and prospects on the block.