Artumas Updates East African Operations

Friday, February 1, 2008

Release

Rovuma Delta Basin Operations Update

Artumas Group Inc. (“Artumas”) management will, on a quarterly basis in 2008,

provide the market with Operations Updates. The following sections provide an

overview of activities over the later months of 2007, and of those which are currently

being undertaken.

 

Overview

Artumas Group has concession rights and interests in over 25,000 sq km on the

Rovuma Delta Basin in East Africa. The Mnazi Bay exploration and production

concession covers a 756 sq km area in south eastern Tanzania. Contiguous to this is

Artumas’ 49.3% participating interest in the Onshore Block in north eastern

Mozambique comprised of a 15,000 sq km exploration and production concession

with an 8.5% working interest in the 10,000 sq km Offshore Area One Block, operated

by Anadarko Petroleum Corporation (“Anadarko”).

 

Rovuma Delta Basin – Geochemical Analysis Update

Geochemical analysis conducted in various stages over the later part of 2007 and as

recently as January 2008, by Core Laboratories and GHGeochem, has provided the

following new information regarding the exploration potential of the Rovuma Basin:

 

• Oil samples collected from Mnazi Bay well tests and rock samples obtained from

drilling operations in mid 2007, have confirmed the potential for a new oil-prone

system in the Rovuma Basin. This new analysis increases the chances of finding

commercial quantities of oil in the Rovuma Delta Basin as a whole.

• The geochemical analysis has determined the presence of certain geochemical

compounds that are key “finger prints” and are specifically associated with oil prone

source rocks deposited in geologically young depositional settings of Tertiary age.

These finger print compounds indentified in the oil samples analyzed, such as a

high pristinephytane ratio, and an abundance of aromatic hydrocarbons, confirm

the presence of a Tertiary source rock. This conclusion is further supported by the

presence of an additional finger print compound known as Oleanane, which is a

specific “marker compound” found in oils derived from a Tertiary deltaic source

rock.

• Further analysis of rock cuttings derived from drilling operations, over the Tertiary

section has revealed significantly thick intervals with a high organic content which

has the potential to be a generator of liquid hydrocarbons. Analysis of the rock

samples also revealed the presence of another “finger print” organic compound

know as Carotane which is linked to source rock depositional environments

associated with oil prone source rocks.

• Compared to earlier evaluations which favoured a gas prone region, the results of

these ongoing studies now suggest that an oil-prone source rock is likely to be

present within the northern area of Artumas’ Onshore Block in Mozambique, and

most likely extending into the offshore area.

 

New analysis of gas samples confirm that deeper potential source rocks in the

Rovuma Basin and within the Cretaceous and Jurassic sections have

thermogenically generated significant quantities of gas.

• As a result of the new geochemistry analysis, the seismic survey lay out has been

designed to focus on the most prospective oil prone northern area of the Rovuma

Basin thereby, enhancing the chance for exploration success.

 

Mozambique – Seismic Operations Update

Current geological evaluation of the Artumas Onshore Block acreage, within the

Rovuma Delta Basin, has identified several highly prospective reservoir types. In

total, over 50 leads have been mapped on the Onshore Block. Artumas will be

acquiring a minimum of 750 km’s of new 2-D seismic data in Mozambique.

• On 19 December 2007, Artumas’ partners Anadarko and The Republic of

Mozambique’s national oil company, Empresa Nacional de Hidrocarbonetos (ENH)

approved our 2008 work program and budget for a 750 km seismic survey.

• An Environmental Impact Assessment (EIA) report covering the seismic operations

area has been submitted to Mozambique authorities.

• Tender documents have been prepared and bids for the line clearing operations are

expected in early February 2008. This hand cut method of line clearing operation,

demining if and where mines are located, will maximize employment and economic

benefits to the region while meeting the highest environmental compliance.

• Following a competitive tender process, a seismic contractor will be selected

shortly. Seismic data acquisition is expected to commence in June 2008, with

program completion targeted for end-November 2008. Data processing and

interpretation will be an ongoing process beginning in August.

• Artumas has initiated preparatory operations in the area of seismic acquisition,

surveying roads, bridges and camp. Infrastructure upgrades will be undertaken

where required, ensuring ongoing benefit to the local communities is provided.

• Current geological evaluation of the Artumas Onshore Block acreage within the

Rovuma Delta Basin has identified several highly prospective reservoir types at

multiple horizons. Within each reservoir type, several potential drilling locations

have been mapped. In total, over 50 leads have been mapped on the Onshore

Block.

• In Offshore Area One Block, a 3,300 square kilometer, 3D seismic acquisition

program has been approved for the deep water area. This is to be complemented

by approximately 1,000 kilometers of 2D seismic, planned for the

shallow/transitional zones in the Block. CGG Veritas has been contracted to

undertake the 3D seismic acquisition. The seismic vessel has arrived in Maputo

with the acquisition program beginning immediately.

 

Mozambique – Play Analysis Update

Rose and Associates is now undertaking a resource and play assessment evaluation

on Artumas’ behalf to determine the resource potential in the Onshore Block and the

shallow/transitional areas of the Offshore Area One Block. This will complement and

update the play analysis released in October 2007, regarding the crude oil resource

potential in the deep water area of Offshore Area One Block (see News Release

dated 16 October 2007). The results of this study are expected to be ready for

release in March 2008.

 

Tanzania –Commercialization Initiatives Update

Phase 1 Pre-Feasibility analysis undertaken for the proposed 300 MW power

generation and transmission interconnection project, collectively termed the VLPP, has

demonstrated the commercial and economic feasibility of this development. Phase 2

analyses is underway, further examining capital and operating costs for the generation

assets, assessing the economics and routing challenges for the Mtwara-Dar es

Salaam transmission interconnection, and examining the environmental aspects of the

overall development through an Environmental Impact Scoping Assessment. The

Phase 2 Pre-Feasibility results are targeted for end-February 2008, and will be input to

a final decision regarding project sanction and financing. The VLPP has been

incorporated within the TANESCO Tanzania Electricity Master Plan update, which is to

be released in first-half 2008.

 

Artumas is maintaining its focus on the marine compressed natural gas (CNG) export

project, moving natural gas from Mtwara to Mombasa. Ongoing monitoring and

geopolitical assessment of the political turmoil in Kenya suggests that the recent

unrest should not impact the timing of the CNG export development.

Within the Lindi-Mtwara region, the Mtwara Energy Project has seen a 24% load

growth in its first year of operations. Artumas continues to receive inquiries regarding

gas and power sales to industrial customers looking to expand and/or locate activities

in proximity to Mtwara energy supply and harbor facilities. The identified sources of

potential load growth range from cement manufacture to refrigeration, fisheries,

agricultural processing, and cassava-to-ethanol manufacture.

 

On Saturday, January 26, 2008, Artumas President & CEO, Stephen W. Mason and

Anthony E. Reinsch, Executive VP met with His Excellency, Jakaya Kikwete, President

of the United Republic of Tanzania. The purpose of the meeting was to discuss with

the President the results of a joint Government of Tanzania and Artumas analysis of

alternative commercialization options for monetizing the natural gas resource of Mnazi

Bay Concession. The Study recommended the VLPP and marine CNG export

projects as the priority developments for natural gas utilization. As a result of the

meeting, the President provided his full support and endorsement for the Projects and

advised Artumas to move forward with both initiatives, targeting 2010 for start up of

commercial operations.

 

Tanzania – Mnazi Bay Concession Seismic Operations Update

The Mnazi Bay exploration and production concession covers a 756 sq km area in

south eastern Tanzania, bordering Mozambique and is part of the north eastern area

of the Rovuma Delta Basin.

 

• Through exploration activities executed over the 2005-2007 period, Artumas has

acquired and interpreted approximately 550 kilometers of 2D land and marine

seismic data over the Mnazi Bay Concession area. This has added to the 475

kilometers of 2D data previously acquired during the 1980’s and subsequently

reprocessed by Artumas in 2005.

• Artumas will be acquiring 103 square kilometers of 3D seismic data over the Mnazi

Bay and Msimbati Gas Fields on the Mnazi Bay Concession in 2008. Approval for

this program has been secured from the Tanzania Petroleum Development

Company (TPDC) and Artumas personnel are currently in-country to commence

operations.

• To allow a greater understanding of the future exploration potential in the Rovuma

Delta Basin, a 21 kilometer seismic tie line between the Mnazi Bay Gas Field and

Artumas’ Onshore Block exploration acreage in Mozambique is being considered to

facilitate a transfer of regional knowledge between the Tanzanian and Mozambican

assets.

• It is expected that seismic line preparation will commence in February and data

acquisition is expected to start in March, with final seismic data acquisition

completed in the second quarter of 2008. Final data processing, interpretation and

mapping are expected to be completed in the third quarter of 2008, allowing future

drilling locations to be firmed up during the fourth quarter of 2008.

• The required EIA for seismic acquisition has been completed and submitted for

approval to the National Environmental Management Council (NEMC) in Tanzania.

Approval has been secured from NEMC to proceed with line clearing for the

seismic program.

• The Mnazi Bay Concession gas appraisal and development drilling program is

planned to re-commence in 4Q:2008. Subject to additional seismic data analysis,

five potential development well locations have been evaluated In the Mnazi Bay

Gas field. Two appraisal wells may also be drilled to prove additional gas

resources reservoired in sands on the periphery of the main Mnazi Bay Field. An

exploratory well on a separate structure may also be drilled prior to the planned

release of the drilling rig and mobilization to Artumas’ drilling program in

Mozambique.

———————————————————————————–

For further information, please contact: www.artumas.com

www.artumas.tv

Stephen W. Mason, President & CEO +44 784 137 3695

Cameron Barton, CFO +1 403 268-6511

Anthony Reinsch, Executive Vice President +1 403 268-6521

Wendy Shaw, Manager of Investor Relations +1 403 681-8960

 

Artumas Group Inc. is an international energy producer focused on monetizing its hydrocarbon

resources in the Rovuma Delta Basin in Tanzania and Mozambique. By exploring, developing,

producing and commercializing known petroleum systems, Artumas is poised to deliver a

sustainable rate of return for its stakeholders while creating social and economic opportunities

for the people of Eastern Africa.

 

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