Rift Completes Agreement with Austral Pacific, Issues Company Update

Drilling Update

 

On May 23, 2008, Rift announced that it had reached an out of court settlement with Austral resulting in the termination of the agreement between the two parties and Rift assuming 100% ownership of Licenses PPL 261 and PPL 235 and the Coral Sea Drilling Rig for a total payment of US$5m. Part of the settlement (US$3m) was dependent on PNG ministerial consent. Rift is delighted to announce that this consent has been granted and the final payment to Austral has been made, thereby concluding the termination of their joint venture arrangements. 

 

Drilling and Seismic Update

 

Rift has also announced that drilling at Puk Puk-1, which commenced in May 2008, has continued to a depth of 1,600 meters and is approaching the target zone.

 

Puk Puk-1 is Rift's second well in this drilling phase, located 25 kilometers from Douglas-1. Following drilling Puk Puk-1 will be flow tested, after which Rift intends to flow test Douglas-1.

 

Work has begun on a 200km seismic program in PPL 235 and PPL 261. Fuel and equipment is on a barge to our port, Yavo, on the Strickland River. The seismic will initially be acquired using Douglas-1 camp, which has been refurbished, followed by a more northerly site, for PPL 261 work.

 

Medical and dental work has recently been completed at Hesalibe village- this follows work done at Somakopa village and Lake Murray.

 

Commercialization prospects

 

The Douglas discovery was made in May 2006. In March 2007, Rift signed a non-binding memorandum of understanding ("MOU") with Alcan (now Rio Tinto Alcan) to further investigate the supply of approximately 40 BCF per annum of gas to the Gove Alumina plant in Northern Territory, Australia for a period of 20 years following initial production. Supply is proposed to be via a direct pipeline from the Douglas discovery to Gove, subject to establishing sufficient reserves. Under the terms of the MOU, the joint venture stated its intention to carry out an active drilling program during the first six months of 2008. Following termination of the joint venture with Austral, Rift is now the sole MOU partner with Rio Tinto Alcan.

 

Furthermore, on 11 June 2008 Rift announced that it had signed heads of agreement with FLEX LNG Ltd. whereby the parties have agreed to work together to develop a floating liquefaction project offshore PNG utilizing Rift's potential gas reserves, utilizing one of FLEX LNG's floating liquefaction units currently on order.