EEN - Undervalued & Oversold

The 2006 drilling campaign is due to get underway in the next month, (before January can now be taken to be before end Jan!) 6 wells are likely to be drilled using a medium sized rig similar to Parker 222 for an extended program of 6 wells back to back (this gives the most efficient rig hire rate) over approx 12 months.

All wells are likely to be in the 11,000 ft plus range and cost up to $24 million ($4 million per well). Potential resources are approx 18 mbo as estimated by Emerald last month. All the wells are likely to be 'stand alone' ie probably no chance for directional drilling, which adds to the time and cost of each well compared with the drilling in 05. The drill sequence is likely to be as follows:

1. El Algarrobo. This is likely to be first as it was most recently scheduled for spud before the end of 05, before being put back to 'first quarter'. Originally it was due to be drilled first quarter 05. From memory Emerald had to apply for permission to ANH for an extension to the drill date as it would now fall outside the date specified in the licence awarded to Rancho Hermoso SA. Site preparation and access road have in the meantime been constructed.

2. Vigia #4. This is a development well and should have good chances of success. The production facilities that should be completed around now at Vigia may handle the extra production from a successful V#4.

3. Campo Rico #4. This is also a development well and should have similarly good chances of success.

4. Vigia South. An exploration well on an adjacent structure or an extension of the Vigia formation that is beyond the limits of directional drilling from V#1.

5&6. Two exploration wells elsewhere in the Campo Rico block that have been identified by the recent 3D seismic as being good drilling prospects.

Additional to this a further well may be drilled at Silfide after production testing of Silfide#1 and appraisal - probably over the first half of 06.

With Emerald's record of drilling success of 7 wells out of seven in the last 2 years, it may be expecting a lot for this next batch of 6 or 7 to do equally well! However further success is almost guaranteed ..... the only question is the extra volume of production and reserves that will be proven up, and the new prospects these wells will highlight for further drilling in 07!