Operations

Merlon International LLC, through its wholly owned subsidiary MPEFC, operates and holds 100% working interest in the El Fayum Concession pursuant to a Production Sharing Contract (PSC) with the Egyptian government.

El Fayum is located approximately 80 km Southwest of Cairo in the Western Desert, and covers approximately 450,000 acres (1,850 square km). The Western Desert is one of Egypt’s most prolific hydrocarbon producing regions, although much of it remains unexplored. El Fayum is in close proximity to several analog large productive fields.

The concession was awarded in 2004 with no producing wells. 3D seismic was shot and processed over 75% of the concession in 2008. First production was established in 2009. As a result of exploration and subsequent development efforts, Fayum has had a regionally unique growth profile over the last 5 years (2010 – 2015 production CAGR of 26%).

As of May 31, 2017, El Fayum has 53 producing wells in 11 development leases covering approximately 70,000 acres (270 square km). Development leases are bounded areas agreed on with EGPC (Egyptian National Oil Company) following a commercial discovery. The term of each development lease is 20 years with an option to extend for an additional 5 years. Assuming extensions, the Fayum development leases expire in 2034 – 2035.

Looking ahead, the company plans to maintain activity within development leases via development / delineation drilling and waterflooding as well as an exploration drilling program on areas outside (exploration acreage).

El Fayum has stacked oil dominated reservoirs with no significant gas discoveries. Producing reservoirs are cretaceous sandstones within varying depositional environments. Many of the reservoirs exhibit favorable conditions for secondary recovery, and several successful waterflood programs are in progress.

El Fayum has an estimated risked recoverable resource potential of 125-150 MMBbls and has produced approximately 16.4 MMBbls through May 31, 2017. Gross daily production is approximately 9,000 BOPD.

In accordance with the terms of the Production Sharing Contract, Egypt received 2.1 MMBbls of crude from Fayum in 2016.