Kiana Oil Field Production Resumes

Beach Petroleum Limited (Beach), as operator of the PPL 212 Kiana Oil Field, has advised the joint venture that production of oil has resumed following installation of surface pumping facilities. Although commissioning of the pump is still underway, the upper Patchawarra zone has recommenced free-flowing at a rate of around 400 barrels of oil per day, with no water.

As announced on May 5, 2006, a pump was installed to facilitate future oil production from two zones within the Patchawarra Formation following the ingress of water that caused a cessation of free-flow oil. Current plans are to initially produce the upper zone, in order to establish its performance over the next two weeks, prior to commencing production from the lower zone.

Initial production data indicate that the water ingression was from the lower zone, as the upper zone has recommenced free-flowing oil at greater than expected rates of around 400 barrels of oil per day, with no water. The pump will now be brought on-stream as flowing pressure declines and a sustained production rate of 400 barrels of fluid per day is anticipated in the longer term. Following inclusion of production from the lower zone total daily production is likely to be of the range of 800 barrels of fluid per day.

At this stage the amount of water cut in the oil from the lower zone remains unknown, however water separation and handling facilities are in-place to accommodate this.

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