Reykjavik Energy, at its board meeting yesterday, formally approved the IDDP funding request of up to 300 Mkr for deepening an IDDP well at Reykjanes, first to 4 km in 2006 and the 5 km in 2007, and to participate in the flow tests in the following two year as requested. At the current exchange rate (61.55 kr/USD) this equals about 4.9 M USD. Now all parties concerned have approved IDDP’s request for similar funds, i.e. Hitaveita Sudurnesja, Landsvirkjun, the Government of Iceland, Orkuveita Reykjavíkur, and ICDP together with the US NSF.

This is a major milestone as funding for the drilling of first IDDP drillhole is now secured. We still expect to seek additional international funding to participate in the elaborate flow test planned for 2008-2009, roughly yet another 4.9 M USD according to our current plan for the flow test as outlined in the feasibility report, which is a technical challenge. That plan however is likely to be re-evaluated as we move along.

The immediate next step is to continue preparing for the drilling to 4 km next year. We need to address the IDDP candidate wells available at Reykjanes and the science program, and to continue selecting and to order appropriate casing material and wellheads. Now we can really get down to addressing the scientific program, secure in the knowledge that it will go forward, and in a reasonable time frame. No matter what is found, the results are going to be significant and exciting for all of us who are interested in the roots of hydrothermal systems.

For those interested in samples from the Reykjanes wells we refer to the August 12th news.