Well P-1-4 delivered an initial flow rate of 65 barrel/day of fluid with net 45 barrels of oil/day producing from approximately 25% of the total net reservoir pay in the well. The company plans to inject steam on a second well in the pilot area in the coming weeks, exposing a larger reservoir section to steam and increasing the amount of steam injected to achieve higher rates.

“I am very happy to see this positive reservoir response after significant efforts on project design, construction, transportation, installation, drilling and commissioning” said Alex Archila, Chief Executive Officer of Madagascar Oil.

To date, Madagascar Oil has spent over $100 million USD at the Tsimiroro license, including the steam injection pilot project, a drilling and coring program to delineate the extent and define the geologic characterization of the Tsimiroro field, aeromagnetic surveys, as well as public roads and bridges.

“These results show positive indications that Tsimiroro will respond well to steam. This milestone brings us one step closer to defining the economic viability of the larger Tsimiroro project” added Archila.

“The purpose of the pilot program is to understand how the oil and sands in the Tsimiroro field react to steam” said Alvaro Kempowsky, General Manager in Antananarivo. “We are currently testing the top sections of the reservoir. We will inject into a much larger section at the next well. The observed rates are in alignment with our early views of productivity” added Kempowsky. The company originally estimated in 2006 a potential rate of 1,000 barrels of oil per day for 10 wells producing from the whole reservoir section.

The oil that is produced in this early pilot stage will be blended with lighter fuels to use as fuel for generation of steam for injection. In addition, the oil will be evaluated for use in road construction projects and electric power generation.

“We are excited to see this day. This marks the very first steam produced oil in Madagascar’s history – over the past 60 years, with more than 10 operators,” said Mr. Joeli Lalaharisaina, General Manager of OMNIS, the agency that regulates oil and gas in Madagascar. “There still is a long road ahead, but it is gratifying to witness this accomplishment.”