Primeline Energy Holdings Inc. announced that it has signed a Letter of Intent for the drilling operations of the forthcoming exciting exploration programme in Block 33/07. In the last few months the company has been in discussion with a number of potential drilling contractors in the region to secure optimal contract terms for an efficient and cost effective drilling operation planned to start in August 2015. The rig market has proved favorable with good availability of suitable rigs and competitive prices.

With the completion of the 3D seismic data interpretation, the selection of drilling locations was completed in the past few weeks and locations have been agreed and approved by the joint management committee established by CNOOC and the company under the petroleum contract for Block 33/07. This allowed the company to finalise the well design and conclude discussions with potential drilling contractors. Following a detailed negotiation process, the company has selected China Oilfield Service Co.

as the drilling contractor and signed the LOI with COSL on July 22, 2015. Under the LOI and subject to final contract, COSL has offered to undertake turnkey drilling works for 2 wells in Block 33/07 for the company, starting in August. The first well will be LS23-1-1 and the second well will be selected from 2 further candidate locations following the evaluation of the results of the first well.

The total drilling costs for 2 wells will be around USD 20 million, excluding costs for any test when oil and gas is discovered.