Ivory Coast: Rialto Energy to Drill Gazelle Side-Track

Rialto Energy Limited provides a weekly update on drilling operations at the Gazelle-P3 ST Well, Offshore Côte D’Ivoire which includes a summary of the operational results following completion of logging operations, and planned next steps.

The Gazelle-P3 well was spudded on 12 March 2012 using the Transocean GSF Monitor jack-up drilling rig. The well is the first of an overall three well drilling programme on permit CI-202.

Since the last report the well has been logged and sampled. A full suite of logs was run, including PEX, CMR, OBMI, DSI, MDT and samples.

Preliminary Results:

The Gazelle-P3 ST well encountered all expected reservoirs of the Gazelle Field, as well as a new exploration objective. Further details are set out below:

Upper Cenomanian

The Upper Cenomanian sands were drilled to appraise the extent of potential upside of the Gazelle oil and gas accumulation. Based on preliminary log interpretation, the UC1 reservoir is poorly developed at this location. In addition, the Gazelle-P3 ST well encountered a well- developed UC3 reservoir, which recovered oil and gas at the previous non-Rialto operated IVCO 14 well on Block CI-202. Reserves attributed to the UC3 reservoir are not included in the Competent Person’s Report (CPR) dated September 2011.

The Company is reviewing operational options, including a possible side-track to relocate the development well at a location where it will be suspended as a producer. A secondary objective of the possible side-track would be to further appraise and, depending on results, potentially test and suspend the UC3 reservoir.

Lower Cenomanian

One of the primary gas reservoirs in the Gazelle Field was found to be gas bearing in Gazelle-P3 ST where it was encountered 200m deeper than the lowest known gas from the earlier IVCO 21 well on Block CI-202. Two high quality PVT samples were taken for use in the Gazelle FEED study. This extension in the proven hydrocarbon column will be incorporated in a revised update of the CPR.

Condor Exploration Prospect

The Condor exploration prospect was encountered with good gas shows however preliminary log results indicated a low permeability gas reservoir at this location. The Gazelle-P3 ST well trajectory was planned to intersect a number of targets and as a result only the edge of the potentially large Condor trap was intersected. CMR results combined with a pressure measurement demonstrate this prospect is in a similar high pressure gas regime to existing proven Lower Cenomanian reservoirs. This result considerably de-risks the trap associated with the greater Condor prospect and it is anticipated that a follow up well to fully evaluate the prospect (750bcf Gross Mean Prospective Resource) will likely be drilled as part of the Company’s next phase drilling programme currently being planned for early-mid 2013. The results of this well will also be incorporated in a revised update of the CPR.

New exploration objective encountered

A 75m TVD gross reservoir package of high quality sand was encountered at the base of the Gazelle-P3 ST Well. Drill cuttings exhibited shows and the logs indicated the sands to be water bearing with possible residual oil saturations. This sand represents an exciting new exploration target and the recently acquired 3D data will be used to identify new drillable impact prospects in the Gazelle/Condor Area with a view to future exploration activity.

Forward Plan

A decision as to whether to drill a side-track to the Gazelle-P3 ST well to further appraise the UC1 and UC3 reservoirs in a more optimal development location will be taken by the Company in the coming days. Once the drilling at Gazelle P-3 ST well (or side-track) is complete, a six well template will be set on the seafloor prior to spudding the Gazelle P-4 well. The Chouette exploration well will then be drilled following completion of the Gazelle P-4 well.   In accordance with its policy of releasing weekly drilling progress reports, the company expects to issue a further drilling report on 6 June 2012, subject to any material events occurring in the meantime.

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Source: Rialto Energy, May 30, 2012