SOCO International plc ("SOCO" or "the Company")

SOCO is an international oil and gas exploration and production company headquartered in London. In addition to its interests in Mongolia, the Company has operations in Yemen, European Russia, Vietnam, Tunisia, Thailand and North Korea.

Successful Drilling Results on First Two Wells in Mongolian 2000 Drilling Campaign and Re-commencement of Crude Oil Sales to China

SOCO's total crude oil production net to its working interest during the first six months of 2000 has averaged approximately 8,525 BOPD (7,205 BOPD in 1999). Average prices received for total crude oil sold by the Company during the period has been approximately US$25 per barrel ($16.70 per barrel in 1999).

SOCO announces that it has successfully completed the 19-9 and 19-10 wells, the first two wells drilled this year on Contract Area 19 in the Tamtsag Basin of Mongolia. Initial log, core and production results indicate that both wells appear to equal or exceed results from the 19-3 well drilled in 1997. The 19-3, which open-hole tested from a net 36 metre interval at a stabilised rate of approximately 690 barrels of oil per day was produced on pump during 1999 at a stabilised rate of 250 barrels of oil per day (BOPD). The new wells were not drill stem tested during drilling operations in order to avoid potential formation damage which is believed to have hampered the production rates of the 19-3 well. Each of the new wells is producing at approximately 250 BOPD at pump capacities which may not reflect ultimate flow potential. Full assessment of the stabilised production capabilities of the new discoveries is pending completion of pumping and production facilities.

The results are particularly encouraging in that these wells are the first to be drilled based upon the 3D seismic acquired in 1999 and under the reduced cost drilling contract. The 19-9 well was drilled as an appraisal well to the 19-3 discovery well and the 19-10 tested a new structure approximately 2.5 kilometres north of the 19-3 well. Upon completion, both wells flowed oil to surface. Log analysis on the 19-10 exploratory well indicate a net productive reservoir of approximately 77 meters in a gross interval from 2,324 meters to 2,449 meters that could yield in excess of thirty million barrels of recoverable oil.

A third well, the 19-11 was spud on 2 July as an exploratory test of a structure approximately 1.5 kilometres east of the 19-3 location. It is anticipated that a further two wells could be drilled this year, one of which will test the extent of the 19-10 discovery. Under the terms of the reduced cost drilling programme (from approximately $2.2 million per well to approximately $0.5 million per well), Huabei Oilfield Services, a Chinese company providing the drilling services, would earn the right to elect to participate in Contract Area 19 after completion of the full eight well programme. Huabei's participation of up to 20% would be on a working interest basis and fully funded by Huabei going forward. Petrovietnam, the Vietnamese national oil company has a 5% interest, carried through the exploration phase, in each of SOCO's Mongolia production sharing contracts, including Contract Area 19.

Sales of crude oil to China, which had been suspended earlier in the year, have been reinitiated as of this week under a sales contract signed 29 June 2000 with China National United Oil Corporation. As with the previous contract, crude oil will be trucked to a pipeline in the Aershan Oilfield for further delivery to the Horhot Refinery in the Inner Mongolia Autonomous Region of China. Although the volumes sold are not significant from a turnover standpoint, the sales program will free storage capacity to gather production data on the new discoveries, while allowing some recovery of costs.

Ed Story, Chief Executive Officer of SOCO, stated, " We are particularly pleased that we have advanced our exploration programme while continuing to build the Company's cash balances, which currently exceed £32 million. The 3D seismic program has provided a tool to significantly improve the predictability of drilling results in the Tamtsag Basin. Of equal importance, is that we are drilling these wells through our contract with Huabei Drilling at a fraction of the cost of the earlier wells. Moreover, the new field discovery potentially places the Company at the threshold of having sufficient reserves to justify planning a comprehensive development program."
 
 
 
 
 
 
 
 

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