OilVoice - White Nile Reports Interim Results

White Nile Reports Interim Results

Tuesday, March 25, 2008

White Nile Ltd, the AIM listed oil and gas exploration company, announces its results for six months ended 31 December 2007.

Chairman’s Statement

This has been another period of both advancement and frustration as we continue to build on our stated objective of becoming a leading independent oil producer focused on Southern Sudan and the surrounding region.

As investors will know, our first acquisition involved the signing of an agreement with the Government of Southern Sudan (“GOSS”) to develop the 67,000 sq km Block Ba in Southern Sudan. Our second was the acquisition of our Ethiopian concession areas where, following extensive evaluation under a Joint Study Agreement, we signed a Production Sharing Agreement (“PSA”) with the Government of Ethiopia in January 2008 for a 29,000 sq km block in the Southern Rift Basin in south-western part of the country.

In line with our expansion strategy, I am now pleased to announce that we are taking a 49% stake in CAMEC Kenya, a Kenyan subsidiary of Central African Mining and Exploration Company Plc in return for funding 49% of the past and future costs. CAMEC Kenya has a Production Sharing Contract (“PSC”) with the Government of Kenya to explore and develop the hydrocarbon potential of Block 11, a 25,000 sq km block located in north west Kenya, which immediately abuts the Southern Sudan border and is contiguous to our PSA area in Ethiopia.

With interests in Southern Sudan, Ethiopia and now Kenya, we are advancing our strategy, gaining exposure across the region and de-risking our operations by expanding our geographical area. We are actively looking at and evaluating additional opportunities that we believe have the ability to further increase our regional presence and build value for our shareholders.

Southern Sudan

We remain frustrated by the lack of clarification being received from the authorities in Southern Sudan. We believe that we have demonstrated our commitment to the country through our investment and development work targeted at proving the hydrocarbon potential of Block Ba. We completed the first phase of exploration work, including high-density 2D seismic acquisition and interpretation, to gain a clearer understanding of the prospectivity of the Jonglei sub-basin of the Muglad Basin. Following target identification, we commenced drilling the Kedelai exploration well, to determine the hydrocarbon bearing potential of the south-eastern extension of the Muglad basin and in particular to evaluate reservoir objectives in the Aradeiba and Bentiu formations. With this investment, in tandem with the implementation of significant community development programmes, our objectives and commitment remain very clear.

As reported in the final results, we have had numerous assurances from leading Southern Sudanese government figures that our interests will be protected, with the likelihood being that we would be included in a consortium that will develop Block B in Southern Sudan, including Block Ba, Block Bb and Block Bc. A delegation of Southern Sudanese government officials, headed by His Excellency the Vice President of the Government of Southern Sudan, Dr Riek Machar, met the Board, its nominated adviser and certain shareholders in London in September 2007, and reiterated that White Nile would receive a 22.5% interest in the enlarged Block B. More recent indications are that White Nile will receive a majority stake in a new company that will control the 22.5% stake in the aforementioned consortium in tandem with Nile Petroleum Corporation Limited. However, this has not progressed to date and, without clarity of title, while maintaining a presence in Juba and our camps on the oil block, our operations remain temporarily suspended until the Board receives full clarification of its position within Southern Sudan.

It has also become apparent that White Nile is part of a bigger economic and political picture that is being played out in Sudan. The allocation of oil assets, the re-drawing of Block entitlements, the establishment of oil industry infrastructure and relations between the north and south are all affecting the decision process. Indeed, the south has 85% of the oil reserves in Sudan and the right to secede in 2011, which again seems to be impacting the way in which oil companies is the country are being allowed to operate. However, we remain committed to the development of oil in South Sudan and we are ready to re-start full operations as soon as we receive clarity.

Ethiopia

We have signed a PSA with the Government of Ethiopia for a 29,000 sq km block in the Southern Rift Basin in south-western Ethiopia, and were awarded sole rights for the exploration, development and production of petroleum in the contract area in return for satisfying various development commitments. The PSA follows a two year Joint Study Agreement (“JSA”) with the Ethiopian Government’s Petroleum Operations Department of the Ministry of Mines over the prospective East African rift system in the southwest of the country.

Geophysical and geological work, primarily in the Omo River area to the north of Lake Turkana, confirmed the presence of deep potential hydrocarbon bearing sedimentary basins within the JSA area. The prognosis by the Company and its advisors is that the contract area is sited at an intersection between a south-eastern extension of the petroliferous Cretaceous and early Tertiary basins of Southern Sudan, in particular the Muglad rift system and the younger East African rift system, which is proving petroliferous in Uganda as highlighted by Tullow Oil Plc’s recent progress.

Under the PSA, the Government of Ethiopia has granted the sole right to White Nile to explore, develop and produce petroleum in the contract area. There is an initial Exploration Period of four years from the date of execution, and a Development Period and Production Period of 25 years from the date of adoption of the development plan. During the initial Exploration Period, White Nile is required to incur minimum expenditure of $6,000,000 for seismic operations and $8,000,000 for drilling operations. White Nile plans to begin seismic operations in Q4 2008, prior to which it will conduct extensive geological field work and preparation for the geophysical programme.

Kenya

Our 49% interest in CAMEC Kenya will further increase our regional exposure. CAMEC Kenya has a PSA with the Government of Kenya to explore and develop the hydrocarbon potential of Block 11, a 25,000 sq km block located in north west Kenya.

Block 11 lies between Lake Turkana and the international borders with Sudan in the north west, Uganda in the west and Ethiopia in the north. It straddles the so-called Turkana Depression and includes the sedimentary basins of Gatome and Lotikipi. The Turkana Depression is a zone of interaction between three rift systems:

1. the NW-SE Cretaceous rift system, which links the productive Muglad Basin of Sudan with the Anza Graben of Kenya
2. the NNW-SSE Paleogene rift system of Western Turkana, which is thought to link with the petroliferous Melut Basin of Sudan
3. the NNE-SSW Oligo-Miocene Turkana Rift of Northern Kenya/Southern Ethiopia, which is analogous to the Albert rift of Uganda where commercial oil has recently been discovered

Results

White Nile remains focussed on the development of its oil concessions in Southern Sudan and the surrounding region. The Company is still in the exploration stage and therefore is not producing revenue. As such, the Company is reporting a pre-tax loss of £799K (2006: £699K).

Outlook

We are focussed on expanding our reach and exploration portfolio and will continue to evaluate opportunities in Africa in order to add value for our shareholders. Our participation in CAMEC Kenya marks a further step in this strategy of building a regional oil company with high quality assets in exciting petroliferous regions. Not only does it give us exposure to north west Kenya but also complements our land positions in Ethiopia and Southern Sudan. We remain frustrated with the situation in Southern Sudan but are confident of our position and entitlements. In the coming year we anticipate the implementation of seismic programmes first in Kenya and subsequently in Ethiopia.

Phil Edmonds, Chairman