Scimitar signs agreement to proceed with heavy oil project in Egypt

Scimitar Production International Ltd. has signed a Heads of Agreement with Egyptian parastatal The General Petroleum Company (GPC), to proceed with development of the large Issaran heavy oil field.
The Heads of Agreement defines the financial and other key contractual terms under which Scimitar will develop Issaran. The negotiated financial terms take into account the substantial investments required for heavy oil exploitation, and provide Scimitar with an attractive rate of return. Scimitar holds 100% of the project subject to a net profits interest, while Proprietary Energy Industries, Inc. has an option to farm-in on 10% of Scimitar's interest.

Canadian heavy oil production technology might help
Estimated by independent engineering firms to hold over 400 million barrels of oil in place, Issaran is located onshore, adjacent to the Gulf of Suez. Three shallow producing zones have been identified to date, all less than 760 metres in depth. Issaran has recently been producing about 500 bpd, which will be retained by GPC. Oil gravities range from 10.5 to 18 degrees API.
Scimitar's studies indicate that heavy oil production technologies developed in Canada have application at Issaran and that the potential exists to increase production to between 5,000 and 20,000 bpd. Scimitar's revenues will be generated from the incremental oil production.
Scimitar will immediately commence testing and well assessment work in the field, while concluding the detailed Service Agreement. A 3-D seismic survey, drilling, and increased primary oil production are planned to be commenced in the early part of 1998. Piloting and implementation of thermal production enhancement techniques would take place after field results confirm current data and assumptions.

About Scimitar
Scimitar is also currently pursuing a number of other oil projects in Egypt. Headquartered in Canada, Scimitar has other current projects including Mozambique, offshore 3-D seismic survey recently completed in the United Arab Emirate of Ajman, and petroleum product marketing in Kenya. Scimitar is continuing to pursue other oil and natural gas projects internationally.