Artumas Group Work Program

Artumas Group Inc. ("Artumas") (OSE:AGI) announces the next stage of its exploration and development program in Tanzania and Mozambique, which will launch Artumas into high impact crude oil exploration in Mozambique, and move the company closer to commercializing its gas resource base in Tanzania.

 

 

In Mozambique, the results of 2D and 3D seismic acquisition will focus exploration drilling on those prospects with the highest chance of discovering commercial quantities of crude oil. With nearly fifty seismic leads in the Rovuma Onshore Block, and more than one hundred leads in the Area One Offshore Block (equivalent in size to more than 400 U.S. Gulf of Mexico blocks), the 2D and 3D seismic programs will significantly improve subsurface imaging in the most crude oil prospective areas of both Blocks.  Acquisition of 3300 square kilometres of 3D seismic over the deepwater areas of the Area One Offshore Block will begin January 2008, and acquisition of a large 2D seismic program on the Onshore Block will begin shortly thereafter.  Artumas is operating the onshore seismic acquisition while partner Anadarko is operating the offshore seismic acquisition.  A minimum of seven wells are planned on the Offshore Block and a minimum of one well is planned for the Onshore Block.

 

 

3D seismic acquisition over the Mnazi Bay development area will be used to optimize appraisal and development locations for the Mnazi Bay and Msimbati Gas fields.  An appraisal and development drilling program will commence after the 3D seismic has been interpreted, gas commercialization negotiations are advanced, and a drilling rig can be mobilized to the Mnazi Bay area of Tanzania.  Eight well locations will fully develop the Mnazi Bay, Mnazi Peripheral and Msimbati Sands, and provide the gas required for one or more large scale gas commercialization projects.

 

 

Drilling program                                                55 MM

2D and 3D seismic program                            52 MM

Commercial facilities                                        14 MM

Business Development                                       8MM

 

 

Rose and Associates recently conducted a resource play analysis on the Area One Offshore Block showing there is a 68% chance of making at least one oil discovery in a seven well exploration program on the Area One Offshore Block.  Under the conservative assumption that standalone discoveries will need to be larger than 115 million barrels (MMbbls) to be of commercial value, the analysis showed there is an 18% chance of making one or more commercial discoveries in a seven well exploration program.  If the commercial threshold proves to be smaller, which Artumas believes is the case, especially in the shallow water and onshore areas of the Block, the chance of making one or more commercial discoveries in a seven well exploration program improves significantly. For standalone fields, there is a:

 

         26% chance of one or more commercial discoveries with an 80 MMbbl threshold,

         37% chance of one or more commercial discoveries with a 40 MMbbls threshold.

In the first quarter of 2008, Artumas will provide separate play analysis for each of deepwater, shallow water and onshore exploration areas in Mozambique.  The play analysis will include important results from geochemical tests on the 24 to 27 degree API oil which was produced during production testing of Artumas' Mnazi Bay wells - the first oil production in the very under explored Rovuma Delta Basin.

 

Artumas' Chief Operating Officer, Douglas Purcell states, "Our geologists and partners describe the Rovuma Delta Basin as the last great undrilled Tertiary basin in the world, with geology and hydrocarbon potential similar to the Niger Delta and the Gulf of Mexico. Contract terms in Mozambique are attractive.  Based on my experience in frontier exploration and development around the world, including West Africa, commercial thresholds and development costs will be low and the economic potential of an oil discovery will be substantial."

 

 

Significant progress has been made on development planning for the Mnazi Bay concession.  Specific well locations have been chosen that target the most well developed reservoir sands above regional gas-water contacts, as evidenced by seismic amplitude anomalies and supported by sophisticated geological modelling. Appraisal and development drilling plans for the next three wells on the development area will target the best locations in the Mnazi Bay, Mnazi Peripheral and Msimbati reservoirs. 3D seismic will ensure that development drilling targets these reservoirs at optimum locations. 

 

Work continues to identify new exploration potential on the Concession, including a new lead that could be drilled from an onshore location, using the land drilling rig planned for development drilling operations at Mnazi Bay.

Douglas Purcell notes, "Work is progressing on detailed development plans for the Mnazi Bay development area.  Two of the development wells we have identified are expected to be significantly better locations than those wells drilled so far; all show potential for commercial hydrocarbon discoveries.  With time to plan the drilling program, we will be able to significantly drive down drilling costs which should keep our F&D costs for full field development considerably below US$1.00 per mcf. Combined with low operating costs, the economics of full field development will be attractive at current gas prices and lower."

 

 

Negotiations to secure the business arrangements required for Artumas to transmit and distribute power in the Mtwara-Lindi Franchise Region are nearing completion.  The capital expenditure program for securing the facilities, generation equipment and build-out of the transmission infrastructure are all being supported through debt financing arranged with EAIF, while the build-out of the transmission line will also benefit from ORET matching grant funds. The Artumas equity commitment to the power generation, transmission and distribution facilities is expected to be US $ 14 million.  Completion of this project will enable Artumas to significantly expand gas production through the existing gas processing facilities at Mnazi Bay, and will almost certainly attract new energy-consuming industry to the Franchise region.