Circle Oil Completes Testing Zita-1 Well in Tunisia

01-10-2008                             

Circle Oil plc, the international oil and gas exploration and development company, announces that testing and analysis of the Zita-1 exploration well in the Ras Marmour permit in Tunisia (23% working interest) has been completed.

Zita-1, Ras Marmour Permit

The testing of the dolomitic Zebbag formation from 1150m to 1163m and the Orbata

dolomitic formation from 1357m to 1380m proved formation water similar to the adjacent Ezzouia field with oil shows but did not result in a flow of commercial

mobile oil.  Subsequent analysis of all data has suggested that the testing sampled the Zebbag formation just below the oil water contact.

Following a review of the seismic and well data by all partners and their advisors, all partners have agreed to drill a curved sidetrack from the Zita-1 well to target the Zebbag formation updip, thus drilling the maximum thickness of the Zebbag and Orbata formation within the top crestal closure of the formation.  The sidetrack will commence in approximately 3-4 weeks time on arrival of directional drilling equipment and engineers from Schlumberger who will carry out the work.  Upon completion, logs and testing will be run as necessary.

Grombalia Permit

In a separate meeting Partners have approved the final location for the first well to be drilled in the Grombalia permit in northern Tunisia (36% working interest) together with its Environmental Impact Assessment and land approvals.

Following completion of an upgraded interpretation using the 2007 seismic results, a new location with lower risk analysis and larger closure area has been prioritised.  This new prospect, named Mellah, will be drilled before the originally intended location at Serdouk. The well will target the same formations as those at Serdouk and the Serdouk well has been rescheduled for drilling at a later date.  The new interpretation has also firmed up a third prospect for future drilling. The civil preparation works for the well will

commence next week and the well spud for Mellah will follow the completion of the Zita sidetrack, presently estimated as being towards the end of the 1^st quarter 2008.

Commenting on the results David Hough CEO Circle Oil said:

"It is disappointing that Zita-1 did not flow commercial mobile oil due to the high water saturations. However, it is encouraging that consensus on the analysis of all the data retrieved from the seismic, drilling and logging puts us at or around the oil-water contact.  We will now sidetrack updip to drill the whole Zebbag and Orbata formation as soon as the specialist directional drilling equipment and engineers arrive from Schlumberger.

"We are pleased that our partners have approved Mellah in the Grombalia Permit as the next well location and, with the civil works starting immediately, the site will be ready for the rig to relocate to once the Zita-1 sidetrack is complete."