Novus To Commence US Deep Shelf Gas Drilling

The first well of the renewed exploration drilling campaign looking for deep shelf gas beneath Padre Island, Texas, is about to commence with the La Playa Mid Frio Unit #1 Well on the La Playa Deep prospect.

A turnkey drilling contract has been agreed and it is currently expected that the well will commence drilling next week, subject to the timing of the rig release from its previous location with another operator. The first target is anticipated approximately 40 days after the well starts drilling.

The La Playa Deep prospect is a three way fault trap with a Middle Frio sandstone objective. The well is designed to test a number of structural closures between approximately 11,800 ft and 14,100 ft total vertical depth (TVD). The planned total depth (TD) of the well is 14,125 ft. Pre-drill analyses suggest a central reserve estimate of 130 bcf of recoverable gas, with over 500 bcf at the upper end of the range.

There are several producing Middle Frio fields in the vicinity of La Playa Deep which are considered geologically similar. The nearest of these is the Stirrup field which was completed offshore in August 2002 at a rate of 14 mmscfd. Cumulative production to date is 4.3 bcf. Nearby onshore analogues in the Middle and Lower Frio include Sarita (250 bcf), El Paistle (207 bcf) and Mobil David (175 bcf).

Under the turnkey drilling contract, the total cost for drilling the well is US$3.8 million (US$2.66 million net to Novus). Given the exploration investment economics and this level of financial exposure, Novus withdrew La Playa Deep from the current farmout campaign and is drilling the well at a 70% working interest.

The well will be directionally drilled from an onshore location close to the La Playa #1 wellsite drilled in 2002 and currently producing at approximately 2 mmscfd. It is anticipated that the well will take 65 days to drill to TD. The first of the three primary targets is anticipated roughly 40 days into the well.

The participants in the La Playa Mid Frio Unit #1 well are Novus Petroleum as operator with 70%; Mitsui Oil with 20%; and Golden Gate Resources with the remaining 10%.

The La Playa Deep prospect is the first of a six well program that Novus is planning at Padre Island during 2004. The next planned well in the drilling campaign is a re-drill of the Murdock Deep prospect. This prospect was previously targeted by a well drilled in 2002 which failed to reach the target formation due to mechanical drilling difficulties. Despite this, sands with strong gas shows at TD were encountered but these could not be tested.

Dr. Bob Williams, CEO of Novus Petroleum, said, "I am delighted that we are finally getting underway with our much anticipated drilling programme at Padre Island. While we have had to endure some frustrating delays, these are now behind us. With a multi-well drilling program about to commence I am confident that the patience of our shareholders will be well rewarded.

"The program will continue on the basis of 'business as usual' despite the unsolicited bid for the company which was received yesterday. In the event of success of course, a discovery in any of the Padre Island Deep Shelf gas wells could substantially alter the valuation base of the company."