TUNISIA - El Bibane (WI 73.8%)

The El Bibane field is located approximately 18 kilometres offshore Tunisia in the Gulf of Gabes.

Production from El Bibane commenced in 1998, with cumulative gross oil production of approximately 3.66 million barrels to date. Estimated net remaining Proven + Probable reserves to Candax are 2.3 MMBbls and 9.1 Bcf of gas.*

The single producing well, EBB-3, was shut-in throughout 2006 and 2007 as a result of successive delays to the re-development of the field which included two new wells, EBB-4 and EBB-5. In March 2008, production commenced from EBB-4 and in July, production was also brought on from the recompletion of EBB-3. As of March 2008, gross oil production was approximately 1,400 bopd (1,050 bopd net to Candax) and 6.5 mmcf/d (4.7 mmcf/d net to Candax) of natural gas, which is sold to the SEEB power generation plant. Gas recycling commenced in October 2008 to optimize recovery of liquids from the reservoir. The full oil rate potential of the two horizontal wells, EBB-3 and EBB-4, was not being achieved due to water production from geologic fractures in EBB-4 and poor cementation behind casing in EBB-3. 

Remedial intervention to increase production from these wells was undertaken in late August and early September 2009 without success.  The Company's technical team is putting together remedial work programs for both EBB-4 and EBB-3 wells, and the scope and timing of these programs will be disclosed in due course. (See press release of September 21, 2009). As a short-term interim measure, Candax is continuing the gas lift operations on the EBB-4 well using gas from the EBB-5 well on a 1/4" choke.  The Company is producing limited volumes of condensate and gas from the field at approximately 250 bopd and 7.5 mmcf/d respectively and the gas is being supplied to the SEEB power plant.  This is an interim measure pending review of the logs and other aspects of the production performance, which will be kept under close review.  These measures may be subject to further change pending additional reservoir management assessment and the timing and scope of the remedial work plan that is being developed.

Although the mechanical problems identified in both the EBB-3 and EBB-4 wells are significantly affecting the Company's oil production in the short term, the Company does not believe that the problems have any material impact on previously reported estimates of the remaining reserves in El Bibane.

* Ryder Scott Report 31/12/08