PA Resources Expands Its Norwegian Portfolio

PA Resources has signed a farm-in agreement with Det Norske Oljeselskap AS (DNO) which will lead to a 15% ownership share in Production Licenses 001B, 028B and 242, and a 10% ownership share in Production Licenses 305, 305B, 332, 334 and 341. All licenses are located within the mature area of the southern North Sea in the vicinity of the existing company assets PL 274, with the Oselvar discovery and PL 046 with the Volve field development on the Norwegian Continental Shelf.

PL 001B, PL 028B and PL 242 are located some 50 km north of the Volve field (block 15/9), and just south of the Grane and Balder fields. Two discoveries have been made in the area and two prospects have been identified. These are the Hanz and West Cable discoveries and the West Cable N and Draupne prospects. The licenses are all operated by DNO (retaining 35% interest after farm-out). It is the intention to drill the largest of the prospects - Draupne - in 2007. Potential development solutions are being studied and will be influenced by further exploration results.

PL 305, PL 305B and PL 341 are located west and north west of the Hanz discovery. The licenses are operated by DNO (retaining 30% after farm-out). Fields in the area include Grane, Balder to the east and Alvheim, Heimdal and Jotun to the north. In addition five prospects of substantial size (50 - 80 million boe) have been identified in the area together with several leads/plays both in the shallow and deep section. The Lie prospect (Paleocene) in PL 305 has been approved by the license group for drilling late 2006/early 2007. One further prospect might be drilled in late 2007 or early 2008.

PL 332 is located just east of the Gyda field. The license is operated by Talisman. Two discoveries and one prospect have been identified in the area. Plans have been made by the operator to drill a well in 2007 or 2008 on this block. Seismic data is currently being acquired. (DNO retaining a 20% interest after farm in).

PL 334 is located between the Ula and Sleipner fields near the UK border. Several prospects and leads have been identified in the block and drilling is currently being evaluated by the license group. Talisman is also the Operator of PL 334. (DNO retaining a 30% interest after farm in).

The gross contingent resources (discovered resources) in these blocks are estimated to 62 million barrels of oil equivalents (boe), net 7.1 million boe to PAR. In addition gross unrisked resources in prospects are estimated to 491 million boe, net 51 million boe to PAR.

The commercial commitments in the farm-in agreement with DNO include carrying of DNO`s expenses (estimated to 285 MNOK before tax) of up to six exploration wells subject to Management approved work programs in the three year period from 4Q2006 according to current plans. Rig capacity has been secured for four of the wells. In the NCS fiscal regime exploration expenses may be deducted from production income, subject to 78% marginal tax or refunded 78% by Norwegian Authorities in the following fiscal year. The Agreement has an economic effective date of January 1, 2006 and is subject to consent from the relevant Management Committees and the Norwegian Authorities.

Ulrik Jansson, President & CEO comments: This deal confirms PA Resources' intention to build a portfolio at the Norwegian Continental Shelf and in the North Sea, consistent with our strategy of targeting mature area oil opportunities. Including this farm-in we now have interests in 10 production licenses covering a range of assets from field development/early cash low, interesting discoveries in the appraisal phase and exploration blocks with high positive impact potential.