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FirstAfrica Provides Gabon Operations Update

Source: www.gulfoilandgas.com 10/4/2006, Location: Africa

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FirstAfrica completed its production drilling of four wells in early September and anticipates initial production of in excess of 7,000 bopd commencing in 3Q 2007 following installation of the production platform and completion of the wells.

As estimated by ECL in its January 2005 EOV Update Report, the EOV Field discovery area which was proven up by Marathon in 1999 has Proved plus Probable (2P) economic reserves of 10.5 million barrels of oil (gross) under the Gabon Government-approved Field Development Plan. FirstAfrica is finalizing an agreement for an FPSO for a 10-year period with an initial 2-year term pending production performance. Based on this initial 2-year contract, an oil price of US$55 per barrel, a discount rate of 10 per cent and an initial production rate of 7,500 bopd, economic consultant Equad Ltd, estimates that the project economics would deliver a Net Present Value of US$57 million. Following completion of the wells and then 6 to 12 months of production history, the Board would seek to extend the commitment period of the FPSO contract. As an illustration, Equad estimates that an initial 2-year period plus two one-year extensions would provide a Net Present Value of US$106 million.

The ECL Exploration Evaluation of the EOV Report dated August 2006 estimates that in the EOV block as a whole (not including the discovery area) there are 279 million barrels of unrisked STOIIP in several exploration prospects. These prospects have a relatively high ‘Chance of Success’ (about 1-in-5). It is the company’s intention to fund future exploration and development from the cash flow generated by production from the EOV Field.

An audit of the reserves in the EOV Field is currently being conducted by Netherland, Sewell & Associates Inc, incorporating results from the four development wells. A preliminary audit result is expected by 16 October 2006 at which stage the initial reserve number is expected to be less than previous estimates, pending further reservoir evaluation and production performance, (although this is not expected to impact the economics stated above, which have been calculated on conservative assumptions. Shareholders will be advised as updated reserve estimates become available.

Update on Epaemeno

Epaemeno is FirstAfrica’s wholly-owned onshore Gabon exploration block which lies to the north of Shell’s recent discoveries in the Awoun block, to the east of Perenco’s discoveries in the Ombena block and to the west of Maurel and Prom’s discoveries in the Omouejy block. ECL’s Epaemeno Block Assessment Report dated 24 January 2006 confirmed the prospectivity of the Epaemeno exploration licence. ECL’s re-interpretation of previous Elf seismic data in this report identified 6 prospects in the Epaemeno block with a total of 228 million barrels of unrisked Prospective Resources (recoverable). Based on ‘Chance of Success’ estimates of between about 1-in-6 and 1-in-10, these prospects have a combined Expected Monetary Value of approximately US$280 million, based on an oil price of US$55 per barrel and a discount rate of 10 per cent..

As a result of the delay in production and the first sale of oil from the EOV Field, the short-term exploration commitments on Epaemeno are now required from the proceeds of the Placing.

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