Regal Petroleum, the AIM-listed (RPT) oil and gas exploration and production group operating in Ukraine, Romania and Egypt, is pleased to provide the following Drilling, Production and Financial update.

Highlights

• Ukrainian well SV-58 spudded late yesterday using the second of Regal's brand-new, American-built top drive drilling rigs contracted from Saipem. Excellent progress continues on well MEX-106 that has reached 2,600 m on its way to a planned maximum depth of 6,200 m.
• MEX-106 and SV-58 are each expected to take approximately six months to complete, which is half the time typically experienced in Ukraine to drill similar wells with regionally available rigs.
• Production expected to be sustained at approximately 1,500 boepd by spring of 2009 on completion of the current well intervention work programme. 
• A further significant increase in production is expected on completion of the new development wells, MEX-106 and SV-58.
• Regal's gas sales price was increased with effect from January 2009 by over $US 50 to $US 242 per thousand cubic metres, representing a 26% increase from December 2008.  
• Finally the Company is pleased to announce that it has executed a mandate outlining indicative terms and conditions for the prospective provision of a loan facility for up to $US100 million by Macquarie Bank Limited ("Macquarie"). Regal's current cash reserves are $US 88 million.

David J Greer, CEO of Regal, commented:

"We are delighted to be spudding the second of our new generation wells targeted at increasing our Ukrainian production and reserves and are especially pleased with the excellent progress that the first rig has made on drilling MEX-106." 

"We are also very pleased to be making good progress on securing a loan facility with Macquarie with the intention of strengthening Regal's financial position and providing the funds to implement the Company's development strategy. We look forward to working together with Macquarie to conclude this facility in the very near future and a further announcement will be made in due course."

For the full announcement, please open the attached PDF document...