Main Assets Gigante Matambo/VSM32

Perhaps the most enigmatic asset in the Emerald portfolio is the Gigante field. Originally drilled in the late 1990's, the G1A well produced at rates in excess of 4,000bopd before a spectacular blow-out, the aftermath of which brought the company to its knees.

The resource numbers published by the previous management were quite mouthwatering. The Annual Report for the year 2000 (http://www.emeraldenergy.com/Emerald-Energy-AR-31-12-2000.pdf pp3-4) talked of up to 350mmbo in place for the "Upper Caballos" - for which probably read Tetuan, with the "Lower Caballos" perhaps being three times as thick. A further RNS (http://www.investegate.co.uk/Article.aspx?id=199908231044283858D) indicated the Caballos could have as much as 500mmbo oil-in-place.

The 2001 interim results (http://www.advfn.com/p.php?pid=nmona&cb=1247558517&article=1722560&symbol=L%5EEEN) also showed that the prior management believed there to be up to 930mmbo in place at Gigante, with 230mmbo in the Tetuan and 700mmbo in the Caballos.

It must be stated that current management have never re-iterated these numbers, and have also since carried out their own 3-D seismic. So, the prior management numbers have to be treated with some degree of scepticism. The company published the results of the prior testing and some of the 3-D seismic results in 2006: http://www.emeraldenergy.com/EmeraldEnergyPlc-58km2_3D_seismic_programme_Gigante_field.pdf

However, investor's long wait to find out what is really in the Gigante structure should soon be over as the ~$35m G-2 well was spudded in December 2008, targeting 4mmbo in the Tetuan and 15mmbo in the caballos. The well reached target depth last month.

Early results showed that both the Tetuan and the Caballos formations were encountered at shallower depths than the pre-drill prognosis. (http://www.emeraldenergy.com/PR20090623.htm) with the Caballos formation being 163' thick (gross) with 107' net thickness. The Tetuan was 32' thick, gross and net.

In an RNS dated 14 July 2009, the company indicated that a test over a perforated interval of 84' in the Caballos flowed oil under natural flow at a rate of 185bopd. The company is delighted with this result and is now going to proceed to flow-test with the aid of an Electrical Submersible Pump (ESP). In an RNS on 27 July, the company said the ESP had raised the production rate to 745bopd, and they were working to further increase that by reducing the formation damage. After that, they will move on to test the primary target: the Tetuan.

Recently, the company has taken on the VSM-32 block which is adjacent to the Matambo block in which the Gigante field can be found. An indication of its prospectivity could maybe be gleaned form the company's commitment to drill an exploration well within the first exploration term of the block (http://www.emeraldenergy.com/VSM32.htm) - presumably wells on VSM-32 will cost a similar amount to G-2.