Verenex receives approval for 2006 work program and budget in Libya

Canadian oil firm Verenex Energy Inc. announced Friday that it has received approval to spend US$48 million for its proposed firm 2006 work program and budget for Area 47 in Libya from the Area 47 Management Committee, which includes representatives from Verenex, 50% partner Medco International Ventures Limited and the Libyan National Oil Company.

The approved 2006 budget for includes the following elements: (1) Four exploration and appraisal wells to be drilled on prospects identified from existing seismic and well control. Estimated cost to drill and production test each well is approximately US$8.5 million (gross). (2) A workover and production test on an existing suspended well in an undeveloped oil discovery with an estimated cost of US$2.0 million (gross). (3) 480 square kilometres of 3-D seismic and 1,500 kilometres of 2-D seismic to be acquired starting in late December 2005. The program is expected to be completed by the end of the third quarter of 2006. The seismic contract was awarded in November 2005 and has an estimated cost of US$7.5 million (gross), of which approximately US$0.5 million will be incurred in 2005. (4) Other geophysical and geological studies, technical and administrative support from Calgary, local office capital other Libyan administrative expenses which total approximately US$5 million (gross).

Contingent on progress and results from the firm drilling program, and subject to equipment availability, the Verenex may advance a proposal to the Area 47 MC to increase this firm budget to include up to two additional wells, a second well workover and long term testing facilities.

The company has submitted tender documents to ten drilling contractors that are registered to operate in Libya and which have been approved for tendering by the Area 47 MC. The Company has had discussions with each of the contractors concerning rig availability and they have been requested to confirm availability and cost structure by early January, 2006. The Company is targeting to secure at least one rig to begin drilling in the first quarter of 2006 if possible.

The Company has also received approval from the Area 47 MC for bidder lists for equipment and services including workover and water well rigs, well casing and wellheads, well logging services and drilling supplies. The Company is in the process of releasing tender documents for these supplies and services and plans to purchase long-lead items, such as well casing, as soon as possible.(alex)