AWE to Explore Large Oil Prospects During a Nine Well Offshore Campaign

Australian Worldwide Exploration Ltd's nine well drilling program offshore New Zealand is expected to start next month and includes some large potential oil prospects.

The proposed order of drilling is as follows;

1) Cutter-1 PEP 38 259. Exploration well targeting the Late Cretaceous Shag Point Formation target potential 80mmbbls. Operator Tap New Zealand (AWE 25%)

2) Hector-1 PEP 38 483. Exploration well targeting Kapuni Group 'C' sands (Mangahewa Formation equivalent, late Middle Eocene, NZ stage Ab, containing bulk of the Maui and Pohokura field reserves) target potential >100mmbbls. Hector-1 is the first of four offshore Taranaki exploration wells location delineated from 3D acquired during April 2005. Operator AWE (44.317%)

3) Tui oil field development well-1. Kapuni Group 'F' sand target. Operator AWE (42.5%)

4) Tui oil field development well-2. Kapuni Group 'F' sand target. Operator AWE (42.5%)

5) Tui oil field development well-3. Kapuni Group 'F' sand target. Operator AWE (42.5%)

6) Tui oil field development well-4. Kapuni Group 'F' sand target. Operator AWE (42.5%)

7) Tieke-1 PMP 38158. Exploration well Targeting Kapuni Group 'F' sands (Farewell Formation equivalent, Paleocene, containing reserves being targeted by the four Tui oil field development wells and oil reserves already produced from the Maui B platform) target potential 15mmbbls. Operator AWE (42.5%)

8) Taranui-1 PMP 38158. Exploration well Targeting Kapuni Group 'F' sands - target potential 5-15mmbbls. Operator AWE (42.5%)

9) West Cape-1 PEP 38 481. Exploration well targeting Kapuni Group 'C' sands target potential >100mmbbls. Operator AWE (42.5%)

AWE will be operator for four offshore exploration wells as well as the four Tui oil field development wells all on the oil-prone western platform of the Taranaki Basin. They will all be drilled by the semi-submersible rig Ocean Patriot. This program will be the largest in AWE's 9-year history.

In addition AWE will be a participant in the Cutter-1 well to be drilled off Canterbury by the Ocean Patriot from next month. Cutter-1 has prospect potential of 70-80 million barrels, AWE says. The main exploration risks are reservoir quality and whether the prospect is charged with oil.

The Hector-1 exploration well in PEP 38483 is currently scheduled to be drilled in November-December. However, exact timing of Hector-1 will be determined by the higher priority activities for the Tui project. The AWE presentation says the Hector prospect, which will target the Kapuni Group C sands, has a prospect potential of over 100 million barrels. AWE says the Hector prospect has good structure, reservoir, source and top seal in a proven oil basin. The main risk for exploration is migration of the oil and fault seal. AWE has a 44.3% interest in PEP 38483, Mitsui E&P New Zealand Ltd 22.7%, NZOG 18.9% and Pac Pacific Petroleum NL 14.1%.

Four development wells will then be drilled by AWE in late 2006-early 2007 into the Tui, Amokura and Pateke oil fields, all in the F sands, which will be linked to the FPSO vessel Umuroa in the Tui oil project in PMP 38158.

Two exploration wells to be drilled inside the Tui mining permit area Tieke-1 and Taranui-1 would have a short tie-back distance to the FPSO if oil is found, which makes the economics very attractive. Both wells will again target are scheduled to be drilled in the second quarter of 2007.

The Tieke prospect has a prospect potential of 15 million barrels of oil and Taranui between 5 and 15 million barrels.

Another well with a large potential prospect is West Cape-1 in PEP 38481, directly west of the Tui Area fields. AWE says the F sands West Cape prospect in PEP 38481 has prospect potential of over 100 million barrels.

The West Cape prospect has a good reservoir, structure and top seal in a proven oil basin. In the AWE presentation it is noted that the main exploration risk is whether there is a seal at the fault that runs through the prospect. West Cape-1 is currently scheduled to be the last well drilled in the campaign in mid-2007.

AWE holds a 40% interest in PEP 38481, Energy Western Holdings Ltd (Shell) 20%, OMV New Zealand Ltd 25% and Todd Petroleum Mining Ltd 15%.

Meanwhile AWE has reported that a major shareholder New Zealand Overseas Petroleum (Holdings) Ltd (part of the Bermuda-based Transworld Group) has sold its entire 11% shareholding in AWE. The AWE shares were issued to Transworld in early 2006 in exchange for a 22.5% stake in the Tui oil field.

Transworld is owned by Mr. John Deuss, for six months a director of AWE who has now resigned from board of the Sydney company.

The former Transworld shares of AWE have been taken up by institutional investors who now hold approximately 65% of AWE shares, with the board and management retaining approximately 4%.

This program constitutes the largest offshore exploration drilling campaign since 2004 when Amokura-1, Pukeko-1, Kiwi-1, Pateke-1, Pateke-2, Takapou-1 and Tawatawa-1 were drilled, largely by the same joint venture participants.

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