Austin Developments Acquires Prospect in Gabon

Austin Developments Corp. has acquired an indirect 18% interest after payout in a production sharing agreement granted by the Gabon Ministere des Mines, de l'Energue, de l'Ectricite et des Resources Hydrauliques in respect of approximately 2,200 square kilometers of oil and gas concessions located in the Gabon Estuary referred to as the Nkani G4-222 Property.

The Production Sharing Agreement includes the exclusive exploration and production rights over an approximate 2,200 square kilometer onshore block situated in the Gabon Estuary. The western side of the concession is prospective for a deep structural trend which is widely covered by a thick salt layer providing a strong seal. Previous seismic coverage had limited ability to see below the salt seal and it has therefore not been tested by drilling. However, a potential pre-salt petroleum system has been proven in the region with good reservoirs and associated seals. It is anticipated that the acquisition of seismic data which will be processed using modern techniques will identify potential traps.

On the eastern side of the concession, a large number of seismic surveys have been shot, identifying further exploration targets. The area is also host to oil showings on two wells in addition to a gas discovery on another. BeicipFranlab, an independent petroleum consultant headquartered in Paris, France has completed an engineering report on the Property for Petrol One Corp., utilizing Canadian National Instrument 51-101 reporting standards. According to the BeicipFranlab Report dated Sept. 1, 2006, "while there are no proven reserves due to lack of updated data, there are Contingent Resources which are favorable and prospective. Contingent Resources are those quantities of oil and gas on a given date to be potentially recoverable from known accumulations of the time but were not economic. There is no certainty that it will be technically or economically viable to produce any portion of the reported Contingent Resource. The block has a gas discovery and has a number of oil showings. According to a review by BeicipFranlab, the Ozoumboule gas field could contain gas in the range of a low estimate of 106.250 bcf, a medium estimate of 159.375 bcf and a high estimate of 212.500 bcf.

The block has also the potential to hold a low estimate of 29 MMBbls, a medium estimate of 100 MMBbls and a high estimate of 242 MMBbls of oil from two prospects. These must be considered to be "Prospective Resources". In addition to the above approximately 40% of the 2,200 square kilometers (approximately 880 square kilometers) have yet to be explored, these must be also be considered to be "Prospective Resources", which are quantities of oil and gas estimated on a given date from undiscovered accumulations." It must also be cautioned there is no certainty that Prospective Resources will be discovered and if discovered that they will be technically or economically viable to produce. A copy of the complete BeicipFranlab Report may be obtained at Headquartered in Paris, BeicipFranlab, an independent evaluator with no ties to Austin, provides consultancy and advisory services throughout the petroleum sector, and has extensive experience in Gabon.

The Prospective Resources are located in the upper sandy layers of the pre-salt series locally called Gamba-Como and Coniquet of Aptian age. Target depth is between 1000-1500 meters. Oil shows are reported within the block and a small oilfield (Remboue) is located at about 40 km from the block. Two Gabonese giant fields are producing in formations of the same age and identical sedimentary environment (Gamba and Dentale formations). The Gamba-Ivinga oilfield producing since the 1960's and the Rabi-Kounga oilfield producing for more than 20 years are located respectively, 200km and 175 km from the Nkani G4-222 block. The Gamba-Ivinga field is located in a regional high separating the Interior Basin from the pre-salt offshore sub basin in a way which is similar to the main high trend in the Nkani G4-222 block.

The BeicipFranlab report indicates that surface conditions and access is limited by several factors: the presence of the Libreville (Gabon capital city), the presence of the Gabon Estuary and the presence of two National Parks, the Pongara National Park to the south and the Akanda National Park to the north. These parks occupy about 30% of the total block surface. In addition, it is noted that most of the prospective area is located in the Gabon Estuary and shallow marine conditions are found.

The BeicipFranlab report was prepared for Petrol One, a CNQ listed company. Petrol One's Board of Directors includes Sheikh Walid Al Rawaf, a pioneer of Petromin a sister company of Aramco, the state national oil company. Sheikh Walid's experience includes Managing Director of the Mobil/Petromin refinery at Yanbu and also a position on the board of the Saudi National Railway. Sheikh Walid spent 35 years at Petromin holding various executive positions including petroleum exploration/production, international trade and marketing until his retirement. The other key oil member of the board is Mohamed Messaoudi who has over 25 years experience in the oil and gas business holding senior positions with major and independent companies such as Nexen Inc, Shell International in Gabon and Shell International in Oman and Tunisia.

Gabon has more than 30 years of history in international investment and production sharing agreements, from many of the well-known multi-national and independent petroleum exploration/production firms. Gabon is currently the fourth largest petroleum producer in Sub-Saharan Africa (after Nigeria, Angola and Equatorial Guinea), with approximate daily production of 300,000 bbl/day, equal to approximately US $18.5 million per day at current market prices.

Austin has a 20% interest before payout and an 18% interest after payout and the ATAS Group of Saudi Arabia has a 10% carried interest after payout. The Government of Gabon has a back-in right for a 15% carried interest, with an option for an additional 5% carried interest if production exceeds 30,000 barrels per day. Petrol One has an 80% interest before payout and a 72% interest after payout, in the Production Sharing Agreement covering the Property.

A US$4,500,000 signing bonus was paid to the Ministry in connection with the issuance of the Production Sharing Agreement. Austin has paid US $900,000 towards this signing bonus for consideration of its 20% interest before payout and 18% interest after payout.

The Production Sharing Agreement provides for a five-year exploration period plus an additional 4 year exploration period. The minimum work obligation in the first exploration period requires expenditures of US$10,000,000 and includes 700 kilometers of 2D seismic and one exploration well. The second exploration period requires expenditures of US$12,000,000 and includes one firm and one option exploration well.


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