Circle Oil Egypt Ltd (COEL) has signed a farm-in agreement covering the exploration and exploitation of hydrocarbons with Vegas Oil and Gas SA for the NW Gemsa Block in Egypt. Circle Oil will hold a 40% interest, with operator Vegas having a 50% interest and Premier Oil retaining 10%. The 400 sq km NW Gemsa concession, lies about 300 km southeast of Cairo in a partially unexplored part of the Gulf of Suez Basin. It includes the April 2005 discovery Al Amir-1, which flowed 787 BOPD on test. The concession agreement has recently entered its second phase of three years and is valid for a further two and a half years. It has the right of conversion to a production license of 20 years, plus extensions, in the event of commercial discoveries. As part of the agreement, subject to ratification by Egyptian General Petroleum Corporation (EGPC) and the Minister of Petroleum, Circle will contribute towards the cost of the Amir SE-1 exploration well which will target the Nubia Sandstone at a depth of 12,870 feet. The Nubia Sandstone is a well known producer within the Gulf of Suez Basin. The drilling rig contract is due to be concluded shortly and the well was scheduled to commence drilling in early February 2008. The structure is a partial dip and fault closure and has an operator estimated potential of 1 00MMBO in situ based on the present outlined closure area.