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Circle Oil, which has claimed its first gas well in Morocco, should start producing from North West Gemsa in Egypt next year and will be ‘a different animal by the second half of 2009’, argues chief executive officer David Hough.

The Limerick-based company, where state-controlled Libya Oil Holdings recently paid £19 million for 29.9 per cent, says it has successfully tested the ONZ6 exploration well at Ouled N’Zala in Morocco’s Rharb Basin, with gas testing at 3.32 million cubic feet a day. AIM-quoted Circle says its six-well drilling programme has now moved to another permit, Sebou.

Hough says the field test results are ‘in line with our expectations for this area’. He suggests the company could establish four or more gas wells, with infrastructure to supply local markets, costing a total $1.5 million (£913,500) each and capable of generating $3 to $4 million revenues a year for ten to 15 years.

The potential could be greater at North West Gemsa in Egypt, where the company’s 40 per cent-owned Al Amir SE-1 sidetrack well tested ‘41-degree API’ oil and gas at sustained rates of 3,388 barrels of oil and 4.25 million cubic feet of gas per day. Greek group Vegas Oil and Gas has 50 per cent and Premier Oil 10 per cent.

Hough argues Libya Oil Holdings might be interested in contributing direct funding to some of these projects. Circle shares have been volatile, falling from 41p in March 2006 to 12.25p in April 2007. Now 21p, they value the company at nearly £71 million and have some long-term speculative appeal.

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Circle Oil	AIM	£59.19m	17.00p	0.50p
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Other company articles:
Circle Oil			11/11/2008
Moroccan find cheers Circle			10/11/2008
Circle hails Egyptian find			03/10/2008
Circle squares up in Iraq			15/05/2006