Oilexco exercises Diamond option

Oilexco North Sea has extended its contract with Diamond Offshore's semisubmersible Ocean Guardian by a further year. The $127.75 million extension will keep the rig in the UK North Sea until April 2009.

Offshore staff

ABERDEEN, UK --Oilexco North Sea has extended its contract with Diamond Offshore's semisubmersible Ocean Guardian by a further year. The $127.75 million extension will keep the rig in the UK North Sea until April 2009.

From mid-April onwards, it should start drilling a three-leg appraisal well on the 1994 oil discovery Ptarmigan, currently operated by Chevron. Oilexco is paying 100% of the costs of the well, and on completion, will earn a 60% interest in the field.

Bad weather has delayed completion of the company's Brenda/Nicol development, both tied back to CNR's Balmoral FPU. Installation vessels were due to lay and connect the umbilical this week, which should allow production to start from both fields by the third week of April. The company then plans to focus on development of Ptarmigan and another oil discovery, Shelley.

It also has theSedco 712 on a long-term contract to sustain its various UK programs.

3/29/2007

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