Cathay Oil & Gas Ltd.

September 20, 2007 12:22 ET

Cathay Oil & Gas Signs M.O.U. with Schlumberger, who will Act as General Project Manager and Contractor to Explore for and Develop Coalbed Methane, Oil, Gas and Minerals in Sindh

TORONTO, ONTARIO--(Marketwire - Sept. 20, 2007) - Cathay Oil & Gas Ltd. (Cathay) and Schlumberger Seaco Inc. have agreed in principle to work in an operational alliance with Cathay as Operator and Schlumberger as General Project Manager and Contractor. This relationship will serve as the basis for a definitive Master Services Agreement (MSA) for the project management and related services necessary to explore and develop coalbed methane (CBM), oil, gas and mineral resources in the Sindh province, Pakistan.

The project work-scope is expected to include responsibility for creating an Indus Basin-wide geological model for CBM and a country-wide geological model for oil, gas and minerals; designing and executing an appraisal drilling program; integrating geophysical and remote sensing data obtained by Cathay into both the Indus Basin and country-wide geological models; creation and implementation of a detailed CBM Reserve assessment with an associated field development plan; and creation and implementation of an oil and gas reserve assessment with its associated field development plan. The field development plans will include selection of appropriate technologies and deployment and delivery of required services such as data acquisition, well engineering and construction, production facilities engineering and construction, reservoir monitoring and management and management and maintenance of the production infrastructure.

A recommendation for the first stage of the reconnaissance program and a definition of critical personnel and equipment required for the second stage exploration drilling program is due within one month. As part of the project, Cathay and Schlumberger will cooperate on the development of a training program in coalbed methane technology for personnel assigned to the program, while Schlumberger will maximize the use of Pakistani content and Pakistani engineers.

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