Following recent press releases concerning the results of the drilling and successful testing of its Puk Puk-1 discovery, Rift has announced the conclusions of the new structural interpretation and resources estimate for PPL 235 after receipt of the processed 2D seismic lines from our 220 km acquisition program this summer. This data was primarily designed to better delineate the undrilled prospects of Douglas North West (DNW) and Aiema, which lie adjacent to the Puk Puk and Douglas discoveries and to better define leads in the northern part of PPL 235.
Rift can report that seismic data of high quality showing very similar gas effects (dim spots and gas chimneys) has been obtained, resulting in an upgrade of the size of our three discoveries to 769 BCF in the P50 case from 688 BCF
The new mapping also confirms that the five prospects immediately adjacent to Rift's existing discoveries at Puk Puk-1, Douglas-1 and Langia-1. These are Dougla North West, Aiema, Puk Puk-2, Douglas North and Douglas North East which all show excellent gas effect and total an additional unrisked prospective resource potential of 772 BCF (P50). Douglas North West, in particular, appears to be potentially larger than either Douglas or Puk Puk and lies across the pathway of where gas from Puk Puk spills out towards Douglas. Additional prospectivity in the region of the border between our PPL 235 and 261 licenses has further potential for 676 BCF (P50) prospective resource.
In summary, the board of Rift believes that the PPL 235 license is now demonstrating the potential to hold contingent resources of > 2 TCF of gas. Finally the Company has received gas composition analysis of the Puk Puk testing, which demonstrates relatively low levels of liquids content and a nitrogen presence of 7-9.5% (depending on pay zone). As the latter is inert, there are no safety or corrosion implications, but [net] sales gas volumes may have to be adjusted downwards by that amount. The Company is happy that CO2 and H2S are insignificant in all three zones.
The tripling of potential P50 resources from earlier estimates, together with the unknown potential of the adjoining PPL261, has caused the Company to re-evaluate the commercial alternatives available to it. Rift has decided to concentrate on commercialization opportunities provided by LNG through a floating liquifaction plant as envisaged in the Heads of Agreement with FLEXLNG where potential annual offtakes of 100 BCF or greater are planned.
Rift has entered into a further, and more defined, agreement with FLEXLNG to commission a pipeline study and further pre-feasibility studies. The results of this study are expected by February 2009.
The Company has also entered a formal process with its Nominated Adviser RBC Capital Markets and Sydney based RFC to establish appropriate commercial partnerships for the funding of future drilling and commercialization of PPL235 and PPL261. The Company would like to complete five wells and flow tests in 2009.
Ian Gowrie-Smith, Chairman of Rift, commented, "We are delighted with the continuing good news from the testing and development of our Papua New Guinean assets. Rift is confident that the flow test data it has just procured, along with the newly acquired seismic data, and the current reprocessing of PPL 261 seismic data will enable us to reach an agreement rapidly with a significant partner for appraisal and development funding."
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