Garden Hill South Update

ENEGI OIL PLC

AIM ticker: 'ENEG'

21 December 2011

Enegi Oil Plc

('Enegi' or 'the Company')

Garden Hill South Operational Update

Further to the release dated 15th November, Enegi is pleased to announce that it has today received formal approval from the Newfoundland and Labrador Department of Natural Resources ('DNR') to proceed with the next stage of the workover at the Garden Hill South ('GHS') property. The Company can now commence operations with 24 hours' notice to the DNR, and has been in contact with Schlumberger and Dragon Lance Management Corporation with regard to scheduling of activities.

Background

GHS is an onshore oil discovery that is 100% owned and operated by PDI Production Inc. ('PDIP'), the Company's 100% owned Canadian operating subsidiary. To date, approximately 30,000 barrels of high quality crude with a gravity of approximately 51° API has been produced from GHS.

GHS was discovered in 1995 by the Port au Port 1 well ('PAP#1 well'), even though this well was initially drilled to test the structural concept for a larger offshore lead. The well produced at up to 1,742 bopd before being shut in. This flow rate was achieved despite heavy invasion and mud losses into the target formation during drilling, however the well proved the structure and presence of hydrocarbons within the Port au Port play.

Following this, Canadian Imperial Venture Corporation 'CIVC' re-opened and flow tested the PAP#1 well, with a subsequent report from Fekete Associates in 2001 indicating that the PAP#1 well could have been severely damaged because of lost circulation material. On this basis, it was estimated that a new well could produce over 1,900 bopd. In a further report by Fekete Associates (also 2001), GHS was estimated as having a speculative potential of up to 127MMBO. CIVC drilled PAP#1 ST#1 and ST#2, however failed to achieve commercial production rates, although the data derived from the drilling programme has considerably increased the understanding of the reservoir.

In a Competent Persons Report ('CPR') produced for the Company in April 2007, GHS is estimated as having mean unrisked contingent resources of 12 MMBO. In 2008, the Company completed a side track ("ST#3") to the PAP#1 well, and the horizontal section provided evidence in support of a compartmentalised reservoir, with over 7,700bbls produced during flow testing in 2009.

Following intermittent flow tests throughout 2010 a chemical soak was undertaken to increase connectivity to the wellbore and, following flow back, reservoir pressure was then allowed to recover until June 2011 when further flow testing was conducted. The rate of pressure recovery has since been seen to increase significantly providing evidence that the wellbore has cleaned up. To date pressure recovery continues and is trending towards the initial reservoir pressure suggesting that production has caused minimal depletion of the reservoir.

Workover Programme

The next stage of the workover for the PaP#1-ST#3 well was designed based on test data obtained since 2009 and has been reviewed by consultants such as Schlumberger. The workover consists of a number of tasks, including:

·; Establishing safe injection rates and pressures, by conducting flow tests and by pumping chemically conditioned crude oil down the well;

·; A bullhead acid squeeze on the target formation;

·; Shutting-in the well for a soak period;

·; Flowing the well to recover treatment chemicals;

·; Shutting-in the well until reservoir pressure recovers;

·; Flow testing at low rates for a 30 to 35 day period to evaluate reservoir inflow and recharge rates above bubble point;

·; Shutting-in the well for an extended build up evaluation test.

As well as facilitating preparation for commercial production, the workover is expected to provide further data that will enable the Company to complete the Development Plan for GHS with the objective being to significantly enhance the ultimate recovery of hydrocarbons from the reservoir.

Updates on the progress of the workover and testing will follow as the programme is implemented.

Alan Minty, CEO of Enegi Oil commented:

"The objective of the work programme is to continue to prove up the commerciality of GHS and allow us to move towards full field development. We are anticipating production from this well and we expect, with future wells, to produce significant sustained flow rates. The workover programme and subsequent testing should justify further investment into GHS".

Enegi Oil Tel: + 44 161 817 7460

Alan Minty, CEO

David Parry, Director Tel: + 1 604 568 0733

Cenkos Securities Tel: + 44 207 397 8900

Jon Fitzpatrick

Neil McDonald

College Hill Tel: + 44 207 457 2020

Nick Elwes

www.enegioil.com

Qualified Persons

The information in this release has been reviewed by Barath Rajgopaul MSc (Mech. Eng.) C. Eng, a member of the Advisory Board of Enegi. Mr. Rajgopaul has over 29 years experience in the petroleum industry. 

The Company

Enegi Oil Plc is an independent oil and gas company. Current operations are focused on opportunities around the Port au Port Peninsula in Newfoundland, Canada and the Clare Basin in County Clare, Ireland. The Port au Port Peninsula is located in western Newfoundland, which, although lightly explored, is in an active petroleum system with light oil having been discovered on a number of occasions. The Clare Basin is located in western Ireland and initial technical studies show that it has the potential to contain shale gas.