Melrose negotiating with the Romanian authorities its entry in the Black Sea oil exploration business

• The company received a certificate from the National Agency for Mineral Resources attesting its competence in oil operations

On the occasion of its announcement of its 2009 results, Melrose Resources announced that in October 2009 it had received the approval of the Romanian National Agency for Mineral Resources (ANRM) to carry out oil exploration in Romania. The government will need to approve the signing of the partnership agreement between Melrose Resources and Sterling Resources, the holder of the much publicized contract for the assignment of the oil perimeters Midia and Pelican of the Black Sea. "We are confident that we will receive the approval within two months at the most", Melrose Resources says in its 2009 financial statement.

Alasdair Robinson, the official of Melrose Resources, said: "The company received the certification from ANRM confirming that it meets all the technical and expertise requirements to execute, manage and coordinate mineral resource exploitations. Melrose is still discussing with the Romanian authorities its formal agreement with Sterling, by which the latter can assign its operations in the Pelican and Midia perimeters. These discussions also involved Sterling".

In turn, Alexandru Pătruţi, the chairman of the ANRM, said: "At the request of Melrose Resources, based on the submitted application, in October 2009, the ANRM awarded the company a certificate acknowledging its technical competence to perform geological research and exploration works in Romania. This document allows the company to perform oil operations as concession holder, operator or subcontractor. For now, Melrose Resources does not hold any of the aforementioned roles for the Midia and Pelican perimeters, which were concessioned to it by Sterling Resources, nor for any other oil concessions in Romania. Other than that, we have no data that will allow us to confirm or deny the information that the takeover by Melrose of Sterling"s concessions will be approved by the Government within two months at the latest".

The government and the parliament currently need to review report of the Court of Auditors on the Sterling concession, as well as the report of the parliamentary commission which investigates the way Sterling received the right of exploration and exploitation of the Midia and Pelican perimeters, by way of an appendix to the concession contract, which was validated by the Tăriceanu government.

The financial statement of Melrose Resources, published last week, show that research uncovered new natural reserves with an estimated 345 billion cubic feet (the equivalent of 9.6 billion cubic meters) in the Ana and Doina concessions owned by Sterling on the Black Sea. Melrose Resources has reanalyzed and reinterpreted again the data originating from the research of the Ana and Doina deposits, and an independent audit revealed that there are new gas reserves of 247 billion cubic feet in the Ana deposit and of 98 billion cubic feet in the Doina deposit.

By the end of 2010, Melrose expects to obtain the approval of the Romanian authorities to develop and exploit the deposits, which require a total investment of around USD 402 million. In order to participate in the development of these concessions, Melrose has ongoing negotiations which are at an advanced stage with several banks which would finance its part of the investment. As such, extraction and exploitation of natural gas could take until the end of 2012 to begin, with an expected output of 110 million cubic feet/day in the first three years. The development will consist of the installation of at least two platforms which will be connected by a 110 km pipeline to a processing point located on the mainland.

At the end of 2011, Melrose expects to effectively take over the exploration and exploitation operations of the two deposits, which have several unexplored areas.

These areas which require additional research, are called Clara and Ioana, both located in the Midia block, whereas in the Pelican block, Melrose wants to explore the Eugenia Sud deposit.