Magellan Petroleum Begins Production Testing at Kiana -1

Magellan Petroleum Australia Limited has begun production testing of the recent Kiana-1 oil discovery in PEL 107 in Australia. Approximtely 1,711 barrels of crude oil (513 barrels net to Magellan) has been produced from the Kiana-1 production test and is being delivered by tanker to Moomba for transportation to market.

The purpose of the production test is to evaluate the productive capacity and potential of the Patchawarra Formation oil discovery, which, on open hole Drill Stem Test (DST), flowed 1,100 barrels of oil per day (BOPD) and 2.8 million cubic feet of gas per day (MMcf/D) on a 1/2" choke. Significantly, the current production test has yielded a lower gas to oil ratio compared to the DST and there has been no water produced to date from the production test.

Whiet the production test at Kiana-1 is testing the upper hydrocarbon zone within the Patchawarra Formation that was tested by DST 4, a lower Patchawarra Formation reservoir was identified using wireline sampling at the time of drilling. This zone was not validly tested with the drilling rig at the time and there is now potential to better assess this zone subject to operational considerations at the conclusion of the current production test.

In addition, and subject to sustained and encouraging production from the zone currently being tested, consideration will be given to the drilling of an appraisal well, Kiana-2, in the near term, subject to joint venture process and approval and rig availability.

Participants in the Kiana-1 production test are Magellan Petroleum Australia Limited with 30.0%; Beach Petroleum as operator with 40.0%; and Great Artesian Oil And Gas Limited with 30.0%.


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