LGX Oil + Gas Inc ROAOF

Poor reservoir quality at Sheryl..huh?

[Bigbadoil]

From SLG 3rd qtr rpt: (I wish people would know really what they are talking about!) Offshore UK The Disraeli discovery (now named Sheryl), our first offshore well located on Block 21/23a inthe Central North Sea, was previously reported as having intersected 25-meters of net pay in the Eocene Tay Sand with the sidetracked well 21/23a-8Z. Appraisal drilling, including coring and pressure measurements was completed during the third quarter with related well testing being completed just after the period end. As planned,intermediate casing was set in the main wellbore and several short-term sidetracks were drilled from this single location. Once the formation data was obtained, each new leg was abandoned prior to drilling to the next location. As new information was collected the number of sidetracks completed was increased from the plan of 3 or 4 to 6. The extra activity was, however, completed within the original time estimate. The plan was always to test only the final sidetrack as additional casing would be set prior to testing. Whilst drilling the 6th leg, significant mud losses were encountered leading to formation damage and insufficient test results. As a result, a 7th leg was drilled using a low solids drill-in fluid and was completed for testing with a sand screen set across the reservoir. As previously reported in our press release of October 10, 2006, the well tested 23 degree API oil at a restricted rate of 1,915 barrels of oil per day (BOPD). The restricted rate resulted from a damaged sand screen and significant sand production during the test. Subsequent to that press release, we have received the results of core data and they confirm previous estimates of superior reservoir quality with porosity exceeding 30-percent and permeabilities up to several Darcies. Analysis of the test results also confirms the production potential from development wells. Our independent consultants indicate well potential between 5,000 to 10,000 BOPD for a vertical or high angle well utilizing artificial lift respectively. The data from the multiple sidetrack program confirmed an accumulation in a main sand channel body in the north and northwest part of the structure. Oil bearing sand was also confirmed on the northeast section of the structure. Independent calculation of in-place volumes and the distribution of reserves are ongoing and further results and related future plans are expected by year-end. Bigbadun'