Rialto Starts Gazelle Sidetrack Drilling Offshore Ivory Coast

Rialto Starts Gazelle Sidetrack

Rialto has commenced a sidetrack (the Gazelle-P3 ST2 well) to optimise the recently drilled Gazelle-P3 ST well in order to underpin the oil and gas development of the Gazelle Field. Following planned testing in the Upper Cenomanian-1 reservoir (UC-1), the Gazelle-P3 ST2 well is intended to be suspended as a future producer. The sidetrack operation is expected to take approximately 12-15 days.

Lower Cenomanian Gas Reservoir

The Gazelle-P3 ST2 well follows the previously announced encouraging results in one of the primary Gazelle Field gas reservoirs, being the Lower Cenomanian (LC-2), which extended the gas column by 200 metres. The PVT samples taken endorse a good quality gas reservoir and also provide required gas samples for FEED. Further, the LC-2 result should have a positive bearing on the interpreted areal extent of the LC-2 reservoir by extending the assumed GWC some ways down-dip relative to the pre-drill assumptions. The LC-2 will also be targeted in the Gazelle-P4 well.

Upper Cenomanian Sands Appraisal

The Gazelle-P3 ST2 well will drill the UC-1 reservoir at a location 200m from where good quality sands were encountered in a previously drilled well (IVCO-14). In addition, the Gazelle-P3 ST2 will drill a well-developed UC3 sand which to date has not been included in contingent resource numbers for this area, north of the Gazelle fault. The sand will be targeted by the sidetrack at a location where the IVCO-14 well recovered oil and gas samples from a Formation Interval Tester. Pressures and samples will be taken from the UC-3 sand to assess its potential as a contributor to future field oil and gas production.

Enhanced Exploration Prospectivity

Rialto is encouraged by the results of the existing Gazelle-P3 ST well which observed good gas shows in respect of the Condor exploration target. The results to date have considerably de-risked the trap associated with the greater Condor prospect. A follow up well to fully evaluate the prospect (estimated 750 bcf Gross Mean Prospective Resource) at a better location where the Lower Cenomanian is greatly expanded is anticipated to form part of the next drilling campaign in early-mid 2013.

Similarly, Rialto believes the unexpected gross 75m sand interval encountered at the existing location below the Condor Prospect represents a potentially excellent reservoir unit. Combined with the recently acquired 3D data, this new play could open up new high impact exploration prospects in the Gazelle/Condor Area.

Fully Funded Three Well Programme

The total CI-202 2012 drilling costs were forecasted to be US$76mm (A$73mm). With the inclusion of the updated drilling and testing programme, including the Gazelle-P3 ST2 sidetrack, the total net drilling costs for 2012 are estimated at US$85mm. The anticipated cost overrun is fully covered by funds received under the January 2012 capital raising and share purchase plan (US$88mm net) and the cash held by the Company on 1 January 2012 (US$45mm).

Volumetric Impact of Results to Date

The results of the Gazelle-P3 ST well continue to be collated and assessed by Rialto. The Lower Cenomanian gas reservoir results to date are encouraging and the sidetrack will confirm the reservoir quality of the UC1 sands and give a better understanding of the UC3 sands and potential hydrocarbon volumes.

Post completion and potential testing of the sidetrack, Rialto will engage specialist consultancy RPS Energy Services to update the Competent Person’s Report in relation to CI-202 and assess the post drill reserves, contingent resources and prospective resource volumes in the Block.

Rialto, June 1, 2012