Ambassador Inks Farm-Out Deal with Outback for PEL 570

Australia's Ambassador Oil and Gas Ltd entered into a binding Heads of Agreement to negotiate a farm-out of a 70 percent share of its highly prospective PEL 570 oil and gas exploration permit in the South Australian portion of the Cooper Basin to Outback Energy Hunter Pty Ltd.

The Heads of Agreement provides for the parties to negotiate a fully termed farm-out agreement under which Outback Energy Hunter will agree to pay all costs (including funding Ambassador's remaining 30 percent share) associated with the exploration work program to satisfy the first 5 year term of PEL 570 up to a maximum of $44.3 million (AUD 50 million). The work program includes the acquisition of 193 square miles (500 square kilometers) of 3D seismic and the drilling of 3 wells.

The farm-out will be conditional upon Outback Energy Hunter subscribing for shares in Ambassador at a subscription price of $0.22 (AUD 0.25) per share. The number of shares to be subscribed for is to be that number of Ambassador's listed options which have not been exercised by their expiry date Oct. 31 (capped at 36.5 million shares or $8.07 million (AUD 9.1 million) and, Outback Energy Hunter finalizing their financing.

Outback Energy Hunter was established by Michael Fowler, former chairman and founding director of Nexus Energy, Ian Boserio, a former senior exploration executive of Shell International, Vince Rusciano, former director of the Treasury Group, and John Hartwell former Head of the Federal Government Department of Resources Energy and Tourism. Messrs Fowler and Rusciano were also co-founders of the Treasury Group which grew to have $1.06 billion (AUD 1.2 billion) of assets under management.

The Chairman of the Board of Outback Energy Hunter Pty Ltd, Michael Fowler, has a long established personal association with Gary C. Evans, the chairman, CEO and founder of New York Stock Exchange listed Magnum Hunter Resources Corporation. Evans has agreed to serve in an advisory capacity.

Evans will bring substantial unconventional onshore shale oil and gas experience having been a pioneer in some of the largest US shale plays in the US during recent years. Gary has been invited to speak at the Australian DUG (Developing Unconventional Gas) Conference to be held this month in Brisbane as a keynote speaker.

Ambassador Oil and Gas CEO, Tino Guglielmo, said, "At the conclusion of this deal Ambassador retains a significant carried interest in some of the most prospective unconventional gas acreage in the Cooper basin. Ambassador is pleased to have attracted a technical team which includes shale gas experts in the United States to assist in the task of commercializing this very large resource."

"This deal will secure Ambassador's funding for future growth," Guglielmo added.